On 1 January 2009 Hazell plc borrows €5 million on terms with interest of 3% fixed for the period to 31 December 2009, going to variable rate thereafter (at inception the variable rate is 6%). The loan is repayable at Hazell plc's option between 31 December 2011 and 31 December 2013.

Initially Hazell plc estimates that the loan will be repaid on 31 December 2011; however, at 31 December 2010 Hazell plc revises this estimate and assumes the loan will only be repaid on 31 December 2013.

Assume that the variable rate remains at 6% throughout the period and that interest is paid annually in arrears.

Required:

(i) Determine the total expected finance costs and effective yield on the loan at 1 January 2009.

(ii) Show the impact of the loan on the statement of comprehensive income and statement of financial position for periods ended 31 December 2009 and 31 December 2010.