Which statement is true? * General borrowings may earn investment income deductible against general borrowing cost Capitalizable general borrowing cost is the total interest of all general borrowing costs Capitalizable general borrowing cost is the actual interest of all general borrowings less any investment income None of the above

Q: Explain the term Wraparound Loans?

A: Wraparound Loans:Wraparound Loans are also called as wrap. It is a type of mortgage loan.It allows a…

Q: Which one of the following statements related to capital gains is correct? Multiple Choice O O O O…

A: The capital gain of an investment is the percentage change in the value of the investment, whether…

Q: eates additional expense without enough benefit through codt savings, income or capital gain, them…

A: Companies use debt in the capital structure because interest on debt is tax deductible and reduces…

Q: Which of the following is not a primary function of Money? a. All the options are correct b.…

A: Money is any item or verifiable record that is generally accepted as payment for goods and services

Q: Repurchase agreement is a collaterized borrowing. Is this true or false? Why?

A: Repurchase agreement is a collateralized borrowing because in this type of agreement the lender…

Q: If debt creates additional expense without enough benefit through cost savings, income or capital…

A: We know that Debt is the cheaper source of finance, because in income tax interest on debts is…

Q: 7. Which of the following is not one of the factors impacting the borrowing rate of repo assets? OA…

A: The factor that is not one of the factors impacting the borrowing rate of repo assets is:D.…

Q: What is a syndicated loan? What are its advantages anddisadvantages?

A: Syndicated loan: It is moreover called as a syndicated bank facility, is loaning given by a bunch of…

Q: How can the effect of below-market-rate loans on value be determined using investor criteria?

A: Below market interest loan is the loan on which interest rate is charged less than the current…

Q: Give and explain the factors that affect the interest rate on the loan

A: Following are the factors that affect interest rate on the loan:  1. Supply and Demand Interest…

Q: In order to recognize a question that requires fv of an annuity formula rather than just fv,…

A: Compounding: Compounding is the interest charged on interest. When any investment is made for…

Q: An investment with a cost of capital higher than its internal rate of return should be accepted.…

A: Internal rate of return is also known as IRR. It is a capital budgeting techniques which help in…

Q: Debt investments with an objective of collecting contractual cash flows is classified as: Group of…

A: Debt investments are those instruments which have a specified time period and interest is paid by…

Q: For statement profit and loss why the loan doesn't include in that statement

A: A follow-up question about loan amount   Loan is the money which has been borrowed by the company…

Q: 5. Which of the following incorrectly matches the classification of the debt investment with its…

A: The amortized cost means the accumulated portion of fixed asset expense or depreciation. One of the…

Q: Interest revenue for debt investments at fair value through other comprehensive income

A: IFRS 9 - Financial instruments deals with the calculation of interest income on debt investments.

Q: When using the internal rate of return method, interest payments should OA. not be discounted OB. be…

A: While using Internal rate of return calculation we have to discount each element of income and cost…

Q: Which of the following type of loan is best used for temporary shortfalls of income? a. Secured…

A: Loans can be short term loans or long term loans

Q: Debt also can be an advantage. How can be a debt can be advantage?

A: Debt Financing:   It is the money borrowed by the business from outside sources. This source of…

Q: ch of the following loan types has a beginning loan balance equal to the ending loan balance? Group…

A: Loans are kind of debt and burden and that carry the interest to be paid but when interest is to be…

Q: What is the arrangement that an SMSF must use for borrowing?

A: Self Managed Super funds (SMSF) are the superannuation trusts. These trust provides benefits to the…

Q: , How is the ability-to-pay principle (c) different from the benefit principle? Briefly discuss the…

A: Introduction:-  Ability to pay—A tax fairness idea that asserts that persons with various levels of…

Q: Explain the addition to the interest rate, HELOC borrowers consider the issues?

A: Home buyers mostly take loans to buy the home and they will pay the debt in equated installments.…

Q: In addition to creditworthiness, on what intangible factors does unsecured lending depend?

A: Unsecured lending is that type of lending in which there is no requirement of any collateral.   For…

Q: Explain or illustrate before-tax cost of debt and after-tax cost of debt.

A: In finance the cost of debt is the effective rate that a company pays on its debt. A company can…

Q: Explain Effective Cost of Two or More Loans?

A: When there is the existence of a situation, where the borrower takes an option to finance the…

Q: Transaction costs incurred the effective interest rate to be used for amortization of an investment…

A: Costs incurred during buying and selling any good or a service are generally referred to as…

Q: 1. Which is correct concerning capitalization of borrowing cost? If the borrowing is directly…

A: Introduction:- Borrowing costs are capitalized as a part of the cost of the qualifying asset only…

Q: Assuming interest costs related to an asset qualify for interest capitalization, which of the…

A: Option 4 is correct The amount that should be capitalised is the lower of actual interest cost…

Q: Regarding the trade-off theory, capital structure is a trade-off between: O tangible and intangible…

A: The capital structure refers to the mix of various available sources of capital which is used by a…

Q: How do you think participations affect the riskiness of a loan?

A: It's a credit that involves the lender in the net income. The interest rate is lowered to take part…

Q: e following statements about annuities are true? Ch hnuity due earns more interest than an ordinary…

A: Annuities are instruments that involve fixed payments. There are mainly two types of annuities i.e.…

Q: Why do we use an after-tax figure for cost of debt but not for cost of equity?

A: Cost of debt is the interest payments a company needs to make for debt financing, whereas cost of…

Q: What are the advantages and disadvantages of financing assets through loans

A: Resource account is that the act of utilizing Associate in Nursing organization's financial record…

Q: It is the fractional part of the capital or sum invested that is paid for the loan or investment.…

A: 1. The rate of interest is some predecided percentage that is charged on the loan amount or provided…

Q: Why might the market value of a loan differ from its outstanding balance?

A: Loan outstanding balance: The outstanding balance or loan balance is the remaining amount that is…

Q: In what ways does an annuity differ from other types of investments? ­ Separate between a "ordinary…

A: The Answer :

Q: Evaluate in terms of the framework, why it is appropriate to capitalize borrowing costs under…

A: Borrowing prices are interest-associated alternative costs that an entity incurs in reference to…

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.