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John Moffat.
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humai
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Sir in J18 Tippletine Qs there are 2 choices subsidized loan scheme from government and convertible loan notes. In Ans while calculating APV, examiner has taken PV of tax saving from interest payment, PV of subsidized loan benefit after tax and issue cost of subsidized loan from government. Right?
My Qs is that why examiner has ignored convertible loan notes? Why we have not taken PV of tax saving from interest payment, PV of subsidized loan benefit after tax and issue cost of convertible loan notes?
John Moffat
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They are not doing both. There are two choices – one is the subsidised loan and the other choice is the convertible loan notes.
Part (a) of the question asks for calculations on the basis that they use the subsidised loan (and so the convertible loan notes are irrelevant).
It is only for part (b) that you are asked to discuss the choice (but calculations for this part are not asked for).
humai
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