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Hello John,
In the practice question 12. Blue in the Notes, – In the Answers part – part (d) Yellow plc, the market value of the debentures is calculated as “D = 500,000 × .90” whereas in the question it states “$500,000 5% debentures valued at $95%”.
Shouldn’t it be “D = 500,000 × .95” or I’m I missing something?
Thank you in advance
In future you must ask in the Ask the Tutor Forum if you want me to answer – this forum is for students to help each other.
It would appear that you are using an old set of the lecture notes, but there is no longer a question called Blue. (We used to have questions at the end, but they have been removed because they are old, and you cannot prepare properly for the exam without buying a Revision Kit from one of the ACCA approved publishers – they contain lots of exam standard questions to practice, and practice is the most important thing of all)
However, the answer is correct. The 95 is a cum int value (because interest it to be paid soon) and therefore the ex int value (which is what we need) is 90.
(My free lectures will help you with this)
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