Gault Ltd obtains the following finance during 1974: (a) borrows 1000 to be repaid in two
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Gault Ltd obtains the following finance during 1974:
(a) borrows £ 1000 to be repaid in two years time with annual interest of 10%;
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(b) borrows £5000 with £5832 to be repaid in two years time, with no annual interest payment.
What is the annual cost of finance in
(a) and (b)?
What valuation would be shown in the balance sheet at the time of the borrowing and after one year?
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