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On 1 January 2023, Fortune Ltd issued $10 million convertible loan notes which carry a nominal interest (coupon) rate of 5% per annum. The loan

On 1 January 2023, Fortune Ltd issued $10 million convertible loan notes which carry a nominal interest (coupon) rate of 5% per annum. The loan notes are redeemable on 31 December 2025 at par for cash or can be exchanged for equity shares. A similar loan note, without the conversion option, would have required Fortune Ltd to pay an interest rate of 8%. The present value of $1 receivable at the end of each year, based on discount rates of 5% and 8%, can be taken as

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