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sept/ dec 2019 Okan co

This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.

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June 2, 2021 at 2:43 pm #622782
yuk123
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I am not able to understand why in the module answer they have not considered the tax relief lost for the APV adjustment ?? there is a tax lost by borrowing at 2.1% rather than 5% why the examiner has not considered this in the sample answer?
June 2, 2021 at 4:24 pm #622809
John Moffat
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He has brought it into the answer.
The subsidy benefit is 5 – 2.1 = 2.9% and he has then multiplied this by the loan amount and by 80%. The 80% is to account for the fact that they are not saving tax of 20% on the subsidy.
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