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Sir, Example 6 In Open Tuition Book. Chapter 23.
So Since We Are Hedging Receivable We Are Going To Create A Liability Of Amount Such That Principal + Interest Is Equal To Amount Of Receivable.
Now The Amount Is $5M.
Interest. = $5M * 1.45% (3 Months) = 72500.
So The Principal Amount (Loan Taken) Should Be $ 4927500.
This Doesn’t Match With Solution In Book.
It doesn’t match because what you have written is not correct!!
Interest is charged on the amount borrowed. If they were to borrow your figure of $4927500 then the interest would be 1.45% x 4927500 = 71448.75 and so they would not end up owing a total of $5M.
As I replied to you yesterday, you must watch the free lectures where I work through the examples.
There is no point using the notes without watching the lectures because it is in the lectures that I explain and expand on the notes. If you are not watching the lectures for any reason then you must buy a Study Text from one of the ACCA approved publishers and study from there.Thanks Sir. I Do Watch Your Lectures. I Might Have Just Skipped This Point. Apologies!
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