Bertrand issued $10 million convertible loan notes on 1 October 20X0 that carry a nominal interest (coupon) rate of 5% per annum. They are redeemable on 30 September 20X3 at par for cash or can be exchanged for equity shares in Bertrand on the basis of 20 shares for each $100 of loan. A similar loan note, without the conversion option, would have required Bertrand to pay an interest rate of 8%. The present value of $1 receivable at the end of each year, based on discount rates of 5% and 8%, can be taken as: 5% 8% End of year 1 0.95 0.93 2 0.91 0.86 3 0.86 0.79 cumulative 2.72 2.58

Bertrand issued $10 million convertible loan notes on 1 October 20X0 that carry a nominal interest (coupon) rate of 5% per annum. They are redeemable on 30 September 20X3 at par for cash or can be exchanged for equity shares in Bertrand on the basis of 20 shares for each $100 of loan. A similar loan note, without the conversion option, would have required Bertrand to pay an interest rate of 8%. The present value of $1 receivable at the end of each year, based on discount rates of 5% and 8%, can be taken as: 5% 8% End of year 1 0.95 0.93 2 0.91 0.86 3 0.86 0.79 cumulative 2.72 2.58

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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