On 1 July 2018 BMW ltd issues $2 millions in 10 year debentures that pay interest each six month at coupon rate of 10percent. At the time of issuing the securities, the market requires a rate of return of 12 percent.interest expenses is determined using the effective interest method.

Formula for PV of $1 in n periods =1/(1+k)n

Formula for PV of annuity of $1 per period for n periods =1-1/(1+k)n over k

Where k is the discount rate expressed in decimal .

Required

1. Determine the issue price of the debentures.

2.provide the journal entries at 1july 2018 and 30 june 2019.