This is 5th question in May 2021 RTP. In ICAI’s first part answer, investment in listed bonds is taken as (14/8.842) *24. I want to understand the logic behind this. Further, in ICAI’s third part answer, cash is not added and expenses payable is not reduced to calculate NAV on purchase date. I couldn’t understand that either. Thanks in advance
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Since the period of maturity is not given for such Bonds, it is assumed that these bonds are perpetual bonds and to calculate value of perpetual bonds we use formula(A/i) ie
coupon amount /interest rate= 24 cr*14%/8.842%
Cash and cash equivalents is as per closing date NAV after deducting all expenses, it will be wrong to assume that such cash also belongs to purchase date too, so its best to assume that its for on purchase date there were no cash balance.