Refer to E14.18 and Auburn Limited. 

Instructions 

Repeat the instructions of E14.18 assuming that Auburn Limited follows IFRS and uses the effective interest method. Provide an effective interest table for the bonds from the inception of the bond to the date of the redemption. Using 

(1) a financial calculator or 

(2) Excel Rate function, you need to first calculate the effective interest rate on the 2013 and 2020 bonds. Round the semi-annual interest percentage to three decimal places.

Data From E14.18

On June 30, 2013, Auburn Limited issued 12% bonds with a par value of $800,000 due in 20 years. They were issued at 98 and were callable at 104 at any date after June 30, 2020. Because of lower interest rates and a significant change in the company's credit rating, it was decided to call the entire issue on June 30, 2020, and to issue new bonds. New 10% bonds were sold in the amount of $1 million at 102; they mature in 20 years. The company follows ASPE and uses straight-line amortization. The interest payment dates are December 31 and June 30 of each year.