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Hello sir,
In lecture 2 of Chapter 9 (relevant costing Example 2), can you please explain why we don’t include the overdraft amount as a relevant cost along with the interest ?The only cost involved is the interest.
If there was no interest then they borrow 20,000 and later repay 20,000, so it wouldn’t end up costing them anything at all. The only cost involved here is that they will be having pay interest which they would not have to pay if they do not do the project.
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