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Past Paper December 2010 Q2

This topic has 1 reply, 2 voices, and was last updated 11 years ago by John Moffat.

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November 24, 2013 at 9:55 am #147607
laengjei
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Hi Sir,
With regard to past paper December 2010 Question 2,
The answer provided by ACCA, on the latter section of “financing side effects”:
The issue cost 4/96 x $14,488, why is it 4/96, I thought the question says issue cost is 4% so it would be 4/100.
November 24, 2013 at 2:05 pm #147630
John Moffat
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The question says that the issue costs are 4% of the gross finance required.
So for every 100 raised, 4 will go in issue costs, only leaving 96 to invest. So for every 96 we need, we will have to raise 100, and for every 96 we need, the issue costs will be 4.
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