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Hi My Dear Tutor, I have a question relating to bank loan and bank overdraft.
Besides finance lease interest charge,will both bank loan and overdraft finance cost be relevant cost?
It all depends on the exact wording of the question.
However borrowing money is not in itself a cost – borrowed money will be repaid later.
The only extra cost involved in borrowing money is the interest that will have to be paid.(If you watch my lectures, you will see that I work through a past exam question where money was borrowed for the project. Again the only relevant cost is the interest that has to be paid on the borrowed money.)
I watched long question in your lecture and there was bank overdraft which its finance cost is considered as relevant cost.But there are two examples in bpp and becker,finance lease purchase including finance cost is not considered as relevant cost.from this inference we can know that besides finance lease purchase’s interest cost is not relevant because it is commited cost but in the case if bank overdraft and bank loan interest cost is relevant
Did i get it correctly?
As I said, it depends on the exact wording of the question.
I don’t have the Becker Kit, but if the BPP example is from their Revision Kit then tell me the number of the question and I will be able to explain.
is there a way where you can search through the questions via a search engine so that I would not type the same question that was asked previously, like I could just search and see if the question was asked already and get the response
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