- This topic has 1 reply, 2 voices, and was last updated 12 years ago by .
Viewing 2 posts - 1 through 2 (of 2 total)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.
OpenTuition recommends the new interactive BPP books for June 2024 exams, Get your discount code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Implication of Ex-Interest & Interest Calculation
This is a doubt from Q50 page 43, answer 50 page 187 of the BPP revision kit.
What is the implication of the usage of the term Ex-Interest on the market value of the loan note, and how have they done the Interest calculation ?
Ex-int simply means that this years interest has just been paid (otherwise the market value would be higher).
The loan notes are paying 9% on nominal, but the interest is tax allowable at 30% and so the interest payable on $100 nominal is effectively 7*0.7 = 6.30 per annum.
They have then calculate the IRR as usual for redeemable debt.