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Fubuki BPP28 Annuity figure

RRichard7y ago
Dear Sir In the answer pertaining to the subsidy they give an annuity figure of 3.588 I cannot understand where that comes from.
John MoffatJohn MoffatTutor7y ago#1
It is the annuity factor at 4.5% (the risk free rate) for 4 years (the length of the borrowing).
RRichard7y ago#2
Ok thanks. I thought we were supposed to use tables and round. I am never sure. If we are mid calculation do we round or only round for an actual calculation? For example: let's say the cost of equity of something is 10.79% so when i discount i use 11% But let's say I am doing a WACC calculation with that same figure, now do i use 11 or 10.79? same with this answer, the 4.5% was used Thanks
John MoffatJohn MoffatTutor7y ago#3
Using the tables to the nearest % will usually still get full marks. Even if you lose marks you would probably only lose 1 mark. It depends how short of time you are - using the formula does not actually take many seconds.
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