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Practise question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Practise question

  • This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.
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  • November 27, 2015 at 1:53 pm #285704
    gonko
    Member
    • Topics: 11
    • Replies: 57
    • ☆☆

    Loan notes in issue of $100. Nominal int 6% payable annually. Redemption in Y8 at 100+5% = $105. Cost of debt 7%.

    Using 7% factors:
    My working is Y1-Y6 int at $6.00 * 5.971 = 35.83
    and the redemption of $105 * .582 = 61.11
    Total value of the note = 96.94.

    Correct answer is 94.03?

    Please help. Thank you so much.

    PS I have posted this on the practise question board also, I hope it is OK to have here also.

    November 27, 2015 at 2:04 pm #285711
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51560
    • ☆☆☆☆☆

    Sorry – the correct answer is 96.94

    I will have it corrected. Thank you.

    November 27, 2015 at 2:20 pm #285719
    gonko
    Member
    • Topics: 11
    • Replies: 57
    • ☆☆

    Thank you very much for clearing that up.

    November 27, 2015 at 2:47 pm #285723
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51560
    • ☆☆☆☆☆

    You are welcome – thank you for spotting the mistake 🙂

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