The letter from Max Leipold (The arithmetic is wrong, July 12) refers. Mr Leipold is quite correct – the arithmetic in my letter is confusing. Business Day reported per Sikonathi Mantshantsha (McKinsey to repay Eskom R902m and apologise, July 9) an unpaid interest figure of R320m. Mr Mantshantsha applied a fixed rate of 10% per year (presumably as an approximation of the prime rate over the two-year period) to the entire fee paid by Eskom in the McKinsey debacle, being R1.6bn. In doing so he came to R320m, or R160m per year over a two-year period. In my letter I adopted this same logic but applied a rate of 5.5% per year (an estimation of a relatively conservative call rate), and I then rounded down the result to R175m. I was therefore more generous to McKinsey than Mr Mantshantsha, in that I applied an approximate call rate as opposed to the prime rate. Neither of us, however, compounded our respective rates over a two-year period. If we had performed our calculations on an amount ...
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