FAC3762 ASSIGNMENT 3 OF 2020

FAC3762 ASSIGNMENT 3 OF 2020
QUESTION 1
(b) Determine effective interest rate

𝑭𝑽 = 15 000 ∗ 500 = 𝑹𝟕 𝟓𝟎𝟎 𝟎𝟎𝟎

𝑷𝑽 = [(15 000 ∗ 450) − 100 000] = −𝟔 𝟔𝟓𝟎 𝟎𝟎𝟎

𝑷𝑴𝑻 = (7 500 000 ∗ 12%) = 𝑹𝟗𝟎𝟎 𝟎𝟎𝟎

𝑵=𝟓
𝑰 = ? = 𝟏𝟓. 𝟒𝟏%
Amortisation Table

Instalment Effective Capital Balance
Interest
1 July 2019 6 650 000
30 June 2020 900 000 1 025 039 125 039 6 775 039
30 June 2021 900 000 1 044 313 144 313 6 919 352
30 June 2022 900 000 1 066 557 166 557 7 085 909
30 June 2023 900 000 1 092 230 192 230 7 278 139
30 June 2024 900 000 1 121 861 221 861 7 500 000

Journal Entries

DR CR
R R
1 July 2019
Bank (SFP) 6 650 000
Debenture Liability (SFP) 6 650 000
Recognise financial liability at fair value minus
transaction costs

30 June 2020
Finance Cost (P / L) 1 025 039
Bank (SFP) 900 000
Debenture Liability (SFP) 125 039
Recognise finance cost and payment of coupon
interest