b) John Ltd issues 100,000 $2 redeemable convertible notes. The notes pay interest at 5% p.a. Each note converts at any time at the option of the holder into one ordinary share. The notes are redeemable at the option of the holders for cash after 5 years. Market rates for similar notes without the conversion option are 7% p.a. Requirement: Determine whether John Ltd has a financial liability or equity instrument resulting from the issue of convertible notes. Give reasons for your answer.