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Is Imputed interest and Notional interest interchangeable?

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Is Imputed interest and Notional interest interchangeable?

Revising ROI and RI,
In a article by Grahame Steven I find notional interest and in text book I find imputed interest used in calculating ROI.

For article: Click here Then click CIMA article link provided in blog page.

If possible discuss with examples

May 7th 2014 AN ACCA USER 8,730 Points

2 Replies

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Quite an interesting question i must say

Well Imputed interest rate is a technical term mostly used by Tax authorities for calculating interest cost for such securities for which no interest rate is being paid during the year for example zero coupon bonds.

But in this Case i don't think that technical term is used, if u see the dictionary imputed and notional have almost the same meaning
there is a quite a possibility that writer was referring to the synonym of notional as imputed rather than it's original technical term.

That is why u can use these two terms interchangeably in performance management because both words carry almost the same meaning.

May 10th 2014 AN ACCA USER 1,610 Points
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Thanks,MUGHEES ISHAQ. You make me see the difference providing the case where imputed interest is used.

Imputed interest is used by tax authorities for calculating interest cost for such securities for which no interest rate is being paid during the year for example zero coupon bonds.

(1+ nominal interest) = (1+ real interest) (1 + inflation), knowledge brought froward from F9- P4 study
Nominal interest rate is the monetary value actually received for any investment.

Thanks again, for your time and answer

May 10th 2014 AN ACCA USER 8,730 Points
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