Health First Group operates as a hospital. The hospital serves multiple patients in South Africa and offers acute hospital care emergency services, mental healthcare, surgery and multidisciplinary healthcare services. The company has been struggling in the last few years as medical regulators continue to put caps on prices, and the firm continues to lose network contracts to other hospitals. The company has decided to implement various strategic changes to enable a higher return on assets to improve profits. The company has decided to convert some of the large hospitals to day clinics and focus on the provision of uncapped specialist services. Health First Group had the following ratios as at 30 September 2018 before the strategic changes took place:

Financial Ratio 30 September 2018 Gross Profit Margin 69% Net Profit Margin 24% Return on total capital 10% Return on Assets 15% Return on equity 23%

To fund the day clinic purchases and hospitals conversion, Health First has decided to issue a bond. On 1 October 2017 Health First issued R100 000 in bonds having an 8 percent annual rate of interest. The bonds mature in 4 years, and interest is paid quarterly. The annual market rate of interest (effective interest) is 12 percent.

Question:

a) Calculate the bond price as at 1 October 2017 and determine whether it is issued at a discount, premium or par.

b) What would be the carrying value of the bond payable as at 30 September 2018?