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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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

100%

What is the amount that will be recognised as finance costs for the year ended 30 September 20X1?

A $500,000

B $800,000

C $735,000

D N

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

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