Rover Ltd has opted to raise capital through the issue of 6% debentures with a nominal value of $30

million. The loan notes, which carry an effective interest rate that is 2.5% above coupon, have issue costs of $620,000, have been issued at a 1.8% discount, and will be repayable at the end of the five years at a 9% premium.

REQUIRED:

Determine the net proceeds to be received from the issue of the loan notes.

Prepare the amortisation schedule over the life of the instrument.