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Hi tutor,
I am confused with the calculation of TERP: do we actually substract the issue costs when calculating the TERP?
I’ve done 2 different questions from past paper June 2014 and June 2009:
June 2014 Q4: MFZ co
Issue costs were deducted from calculationJune 2009 Q3: NG Co
Issue costs were not deducted from the calculationHope you could help me on this, thanks 🙂
In June 2014 the question specifically said that issue costs were to be paid from the money raised.
With regard to 2009, there was no question called NG in the June exam 🙁
I’m sorry- it was December 2009. That’s no wonder, the question from December 2009 did not mention that issue costs would be paid from the money raised. These questions can be so tricky! Thanks for the help 🙂
You are welcome.
(And don’t worry too much – in the long-form questions, each bit of your workings is marked separately. So even if you dealt with the issue costs wrongly, you would only lose 1 mark (if your approach to everything else was correct). It is not the final answer that gets the marks, but each bit of your workings.)
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