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Is there an issue cost on subsidised loan as well, as there is on normal borrowing? What to do if nothing is stated clearly?
There is unlikely to be an issue cost (because it is a loan normally being given by a government. It is only when there is an issue of debt borrowing that there will be issue costs involved).
If nothing is stated then there are no issue costs.
Exactly, I thought the same. But there is a question fubuki co dec 2010 where examiner has taken issue costs on subsidised loan as well, wonder why?
Thanks for your assistance.
Because the question says that the issue costs are 4% of the gross finance required. It does not distinguish between the finance raised from the subsidised loan and that raised from the issue debt.