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On 1 July 2022 Kiama Ltd issues $5 million in five-year bonds that pay interest every six months at a coupon rate of 8 per cent.

 

On 1 July 2022 Kiama Ltd issues $5 million in five-year bonds that pay interest every six months at a coupon rate of 8 per cent. At the time of issuing the securities, the market requires a rate of return of 10 per cent. The interest expense is calculated using the effective-interest method.

  1. Determine the issue price. (2.5 marks)

Issue Price= Coupon Payment

  1. Provide the journal entries at:
  1. 1 July 2022 (2.5 marks)

Type answer here

  1. 30 June 2023 (2.5 marks)

Type answer here

  1. 30 June 2024. (2.5 marks)

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