Dear sir,
In this question, they are building a stadium. In the question they say that the cost of the building includes direct cost of 20m $ in February, and then 50m $ for the next 3 months until the end of may.
The average cost of the building is calculated as:
(20+70+120+170)/4
Is this because in February, the cost of building was 20
In march the cost of building was 70, in April the cost was 120 and in may the cost was 170.
So therefore the average cost is the above equation mentioned. Am I correct? I am a bit confused
Thank you
Ask the Tutor ACCA SBR
Q Emcee Borrowing Costs
You are correct - that is the logic that the question writer had in mind. (It's a very ancient question).
Thank you!!
My pleasure
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