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hi
issue costs here are 2% of 42970 = 876.94
why we are not taking into account the tax relief on issue costs?
these should be 876.94 * 0.8= 701.5
It depends whether the issue costs were paid out of the amount borrowed (in which case the amount borrowed would be the amount needed for the investment plus the issue costs), or whether the issue costs were paid out of existing funds (in which case the amount borrowed is just the amount needed for the investment).
If it is not clear which from the question (and it usually isn’t clear) then as always in Paper AFM, state your assumption and you will still get the marks (even if you assumed differently from the examiners answer).
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