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kaplan kit- Qs- HGR co
i don’t understand how they calculated overdraft interest value.
i got it how they got monthly rate= (1.0617)^(1/12).in the answer given back,
Period 1 interest = 3800000 x 0.005 = 19000
Period 2 interest = 3549000 * 0.005 = 17745 or 18000
Period 3 ,, = 3517000 x 0.005 = 17585 or 18000if action is taken
period 1 interest = 3800,000 x 0.005 = 19000
,, 2 ,,, = 3075000 x 0.005 = 15375 or 15000
period 3 interest = 2566000 * 0.005 = 12830 or 13000sir i don’t get it how they calculated the values- 3800, 3549, 3517 or 3800, 3075, 2566
overdraft balance is 3800 in thousands
I presume you are happy with the Receipts and payments…that gives net cash flow along with overdraft int in pd 1-3 and bond int in pd 2 and capital investment on pd3.
You have to calculate “monthly” bank overdraft interest
So it’s 1 + rate to the power of 1/12
1.0617^1\12
This is 0.5%So O/d is 3.8m that makes it 19k for pd 1
So O/d is 3,549m and so that makes it 18k for pd2
So O/d is 3,517m and makes it 18k in pd 3The cl bal becomes the op of the next period so cl for 1 is 3,549 as above and so on
in pd 2 there is 200 int on bonds to deduct so it’s net cash flowIf action is taken
Same again but you put the monthly reduction in accounts receivable of 270 and reduction in inventory of 204
But now the overdraft will be lower as the rec & inv lower outstanding balances
So the closing bal in pd 1 is 3,075 so this becomes the opening of the next and so on
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