guys how come sometimes on cash &carry they don’t take into account borrowing costs? as in book 5 page 187, question 2c. I would really appreciate an input
I believe, the borrowing costs (1% per month) are in the roll forward of the 2.5 borrowed in line 3 of the answer.
isn’t that just the storage cost, the borrowing rate is 6%
florinpop, are you saying where they don’t lend the money? i think the concept is just wrong. i think cash-n-carry means putting up no money.
Apologies. Was looking a problem #3. For 2c did not think calculations were required since there was such a big difference between Dec 04 and Sept 05. Just eyeballing it figured C&C did not make sense. Agree, if you want to calculate it, should have interest component.
paca thanks for the input. something is fishy there
Also note that for the LOS (Look Closely!!!) you don’t need to do the calcs (I think it said “discuss” not “demonstrate”). At least, thats what I hope. Although I reviewed this closely after doing the 2008 sample thing…