Mathematics · Financial Accounting
An 8% $30m convertible loan note was issued on 1 April 20X5 at par. Interest is payable in arrears on 31 March each year. The loan note is redeemable at par on 31 March 20X8 or convertible into equity shares at the option of the holders. A similar instrument without the conversion option has a market interest rate of 10% per annum. Given the discount factors at 10% are: Year 1 = 0.91, Year 2 = 0.83, Year 3 = 0.75, and Cumulative = 2.49. What amount will be credited to equity on 1 April 20X5 in respect of this financial instrument?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1$30,000,000
- 2$28,476,000
- 3$1,524,000✓
- 4$5,976,000
Correct answer
$1,524,000
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