Toobits Ltd issues $5m in convertible bonds on 1 July 2018. They are issued at their face value for a term of four years. They pay an interest rate of 5% annually in arrears. The bonds may be converted to shares at any time in the next four years. Organisations similar to Toobits Ltd have recently issued similar debt instruments (without the conversion option) with an interest rate of 7%. On 30 June 2021, all the holders of the convertible notes elect to convert the bonds to shares in Toobits Ltd. Diddies Ltd purchased $1m of the convertible bonds from Toobits Ltd when they were issued on 1 July 2018, within a bond-trading business model. On the same date, Diddies Ltd paid $5,000 of brokerage costs associated with purchasing the bonds. Required: a) Identify the present value of the bond liability and calculate the equity component. b) Calculate the stream of interest expense across the life of the bonds. 4 marks 5 marks