I am confused with the illustration in example 5. Why is the 0.2 million substrated from the 1.5 million. Also how was the interest income calculated?
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Need help with the illustration of net borrowing cost on pg 26 lecture notes
5y ago#1Hi,
The net borrowing costs are capitalised. So, we have incurred 1.5 million of costs but also earned 0.2 million of income on money deposited.
The interest income will be the $20 million invested for one month at 4%.
Thanks
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