Question: Please answer in 30 min Note: Present Value and Present Value of Annuity tables are provided at the end of the exam in Question 5

Please answer in 30 min

Note: Present Value and Present Value of Annuity tables are provided at the end of the exam in Question 5

Parrot Ltd issues $7 million in convertible bonds on 1 July 2023. They are issued at their face value and pay an interest rate of 7 per cent. The interest is paid at the end of each year. The bonds may be converted to ordinary shares in Parrot Ltd at any time in the next 3 years. Organisations similar to Parrot Ltd have recently issued similar debt instruments but without the option for conversion to ordinary shares. These instruments issued by the other entities offer interest at a rate of 8 per cent.

On 1 July 2024, all the holders of the convertible notes decide to convert the bonds to shares in Parrot Ltd.

REQUIRED:

  1. Record the issue of the securities on 1 July 2023 (1 Mark)
  2. Recognise the interest payment on 30 June 2024 (1 Mark)
  3. Recognise the conversion of the bonds to ordinary shares on 1 July 2024 (1 Mark).

Appendix A

Present value of $1 in n periods

Period

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

12%

1

.9901

.9804

.9709

.9615

.9524

.9434

.9346

.9259

.9174

.9091

.8929

2

.9803

.9612

.9426

.9246

.9070

.8900

.8734

.8573

.8417

.8264

.7972

3

.9706

.9423

.9151

.8890

.8638

.8396

.8163

.7938

.7722

.7513

.7118

4

.9610

.9238

.8885

.8548

.8227

.7921

.7629

.7350

.7084

.6830

.6355

5

.9515

.9057

.8626

.8219

.7835

.7473

.7130

.6806

.6499

.6209

.5674

6

.9420

.8880

.8375

.7903

.7462

.7050

.6663

.6302

.5963

.5645

.5066

7

.9327

.8706

.8131

.7599

.7107

.6651

.6227

.5835

.5470

.5132

.4523

8

.9235

.8535

.7894

.7307

.6768

.6274

.5820

.5403

.5019

.4665

.4039

9

.9143

.8368

.7664

.7026

.6446

.5919

.5439

.5002

.4604

.4241

.3606

10

.9053

.8203

.7441

.6756

.6139

.5584

.5083

.4632

.4224

.3855

.3220

11

.8963

.8043

.7224

.6496

.5847

.5268

.4751

.4289

.3875

.3505

.2875

12

.8874

.7885

.7014

.6246

.5568

.4970

.4440

.3971

.3555

.3186

.2567

13

.8787

.7730

.6810

.6006

.5303

.4688

.4150

.3677

.3262

.2897

.2292

14

.8700

.7579

.6611

.5775

.5051

.4423

.3878

.3405

.2992

.2633

.2046

15

.8613

.7430

.6419

.5553

.4810

.4173

.3624

.3152

.2745

.2394

.1827

16

.8528

.7284

.6232

.5339

.4581

.3936

.3387

.2919

.2519

.2176

.1631

17

.8444

.7142

.6050

.5134

.4363

.3714

.3166

.2703

.2311

.1978

.1456

18

.8360

.7002

.5874

.4936

.4155

.3503

.2959

.2502

.2120

.1799

.1300

19

.8277

.6864

.5703

.4746

.3957

.3305

.2765

.2317

.1945

.1635

.1161

20

.8195

.6730

.5537

.4564

.3769

.3118

.2584

.2145

.1784

.1486

.1037

25

.7798

.6095

.4776

.3751

.2953

.2330

.1842

.1460

.1160

.0923

.0588

30

.7419

.5521

.4120

.3083

.2314

.1741

.1314

.0994

.0754

.0573

.0334

40

.6717

.4529

.3066

.2083

.1420

.0972

.0668

.0460

.0318

.0221

.0107

50

.6080

.3715

.2281

.1407

.0872

.0543

.0339

.0213

.0134

.0085

.0035

60

.5504

.3048

.1697

.0951

.0535

.0303

.0173

.0099

.0057

.0033

.0011

Appendix B

Present value of an annuity of $1 per period fornperiods

No. of payments

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

12%

1

0.9901

0.9804

0.9709

0.9615

0.9524

0.9434

0.9346

0.9259

0.9174

0.9091

0.8929

2

1.9704

1.9416

1.9135

1.8861

1.8594

1.8334

1.8080

1.7833

1.7591

1.7355

1.6901

3

2.9410

2.8839

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

2.5313

2.4869

2.4018

4

3.9020

3.8077

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

3.2397

3.1699

3.0373

5

4.8534

4.7135

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

3.8897

3.7908

3.6048

6

5.7955

5.6014

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

4.4859

4.3553

4.1114

7

6.7282

6.4720

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

5.0330

4.8684

4.5638

8

7.6517

7.3255

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

5.5348

5.3349

4.9676

9

8.5660

8.1622

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

5.9952

5.7590

5.3282

10

9.4713

8.9826

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

6.4177

6.1446

5.6502

11

0.3676

9.7868

9.2526

8.7605

8.3064

7.8869

7.4987

7.1390

6.8052

6.4951

5.9377

12

11.2551

10.5753

9.9540

9.3851

8.8633

8.3838

7.9427

7.3561

7.1607

6.8137

6.1944

13

12.1337

11.3484

10.6350

9.9856

9.3936

8.8527

8.3577

7.9038

7.4869

7.1034

6.4235

14

13.0037

12.10621

1.29611

0.5631

9.8986

9.2950

8.7455

8.2442

7.7862

7.3667

6.6282

15

13.8651

12.8493

11.9379

11.1184

10.3797

9.7122

9.1079

8.5595

8.0607

7.6101

6.8109

16

14.7179

13.5777

12.5611

11.6523

10.8378

10.1059

9.4466

8.8514

8.3126

7.8237

6.9740

17

15.5623

14.2919

13.1661

12.1657

11.2741

10.4773

9.7632

9.1216

8.5436

8.0216

7.1196

18

16.3983

14.9920

13.7535

12.6593

11.6896

10.8276

10.0591

9.3719

8.7556

8.2014

7.2497

19

17.2260

15.6785

14.3238

13.1339

12.0853

11.1581

10.3356

9.6036

8.9501

8.3649

7.3658

20

18.0456

16.3514

14.8775

13.5903

12.4622

11.4699

10.5940

9.8181

9.1285

8.5136

7.4694

25

22.0232

19.5235

17.4131

15.6221

14.0939

12.7834

11.6536

10.6748

9.8226

9.0770

7.8431

30

25.8077

22.3965

19.6004

17.2920

15.3725

13.7648

12.4090

11.2578

10.2737

9.4269

8.0552

40

32.8347

27.3555

23.1148

19.7928

17.1591

15.0463

13.3317

11.9246

10.7574

9.7791

8.2438

50

39.1961

31.4236

25.7298

21.4822

18.2559

15.7619

13.8007

12.2335

10.9617

9.9148

8.3045

60

44.9550

34.7609

27.6756

22.6235

18.9293

16.1614

14.0392

12.3766

11.0480

9.9672

8.3240

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

5 points Save horwar Note: Present Value and Present Value of Annuity tables are provided at the end of the exam in Question 7, On 1 July 2022, Michaela Lid issues $1 million in five-year bonds that...

Q:

need help with this question 11 points Note: Present Value and Present Value of Annuity tables are provided at the end of the exam in Question 7. Due to increased demand for local holidays in...

Q:

need help with this question 11 points Note: Present Value and Present Value of Annuity tables are provided at the end of the exam in Question 7. Due to increased demand for local holidays in...

Q:

Present Value and Present Value of Annuity tables are provided at the end of the exam in Question 4. According to the NSW State Government, Powerhouse Parramatta is the first NSW State Cultural...

Q:

please answer it 6 Please note that Present Value Tables are attached at the end of this exam for your reference. Question 1 (25 marks) On 1 July 2019 Parent Ltd acquired all the issued share capital...

Q:

I need serious help with these problems. Any assistance will be greatly appreciated! Practice Set for Chapters 6 and 7 Name__________Sean Ellis_____________ I STRONGLY ENCOURAGE YOU TO REVIEW THE END...

Q:

I need some serious help with these problems. An assistance would be greatly appreciated. Practice Set for Chapters 6 and 7 Name__________Sean Ellis_____________ I STRONGLY ENCOURAGE YOU TO REVIEW...

Q:

Please see attached document for my Accounting HW help needed (it looks like a lot of pages, but only like 15 problems) 5/10/2016 Chapter 10 Problems Acct 211: ACCT 211 - Spring D 2016 24 Chapter 10...

Q:

14. [-/4 Points] DETAILS HARMATHAP12 1.6.040. Complete the problem by using the accompanying gure, which shows a supply function and a demand function. (Assume price is measured in dollars.) p 40 30...

Q:

You are saving for a Porsche Carrera Cabriolet, which currently sells for nearly half a million dollars. Your plan is to deposit $30,800 at the end of each year for the next 10 years. You expect to...

Q:

A salt mine you inherited will pay you $55,000 per year for 25 years, with the first payment being made today. If you think a fair return on the mine is 7.5%, how much should you ask for it if you...

Q:

Step 1: Calculate the mean (X-bar) and range (R) of all individual samples. Step 2: Calculate the grand mean of sample means (X-dbar). Calculate the average range (R-bar). Step 3: Obtain the values...

Q:

If Saling's brother wote her a personal check and she slepouthed in inte lier checking account. which of the following would occur? A . M 1 would decrease; MQ mobut remain uncharged. B . M 1 evelot...

Q:

Please answer questions A, B and C. Question A goes through year 0 through 5. A price level adjusted mortgage (PLAM) is made with the following terms: Amount = $95,300 Initial interest rate = 4...