The correct answer to this question was D.

The principle of the cost of finance has been examined at F7 several times and with this type of 0% interest product, the finance cost is built into the selling price.

A similar principle would also apply to other 'offers' such as free maintenance or insurance.

Approximately half of candidates believed C to the correct answer.

This is really surprising as the treatment of a convertible loan note which involves splitting the initial proceeds between debt and the value of the equity option has been examined often (and answered well).

Perhaps many candidates did not read or think about the words 'whole of the proceeds' or 'convertible' properly.