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Subsidised loan

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

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November 6, 2021 at 12:57 pm #640060
Mahrukh
Member
- Topics: 26
- Replies: 38
Hello John,
Is there an issue cost on subsidised loan as well, as there is on normal borrowing? What to do if nothing is stated clearly?
Thanks 🙂
November 6, 2021 at 4:15 pm #640068
John Moffat
Keymaster
- Topics: 56
- Replies: 51585
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.
November 7, 2021 at 4:30 pm #640178
Mahrukh
Member
- Topics: 26
- Replies: 38
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.
November 8, 2021 at 7:29 am #640204
John Moffat
Keymaster
- Topics: 56
- Replies: 51585
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.
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