What is the easy way to remember when to calculate the present value? For example
On 1 July 20X7, a company purchased a five-year loan note investment with a par value of $7m. The investment was purchased at a 12% discount. The loan note has a coupon rate of 5% and an effective interest rate of 7%. Interest is receivable annually in arrears. The company has the intention of holding the loan note to receive the contractual cash flows.
How much finance income should be reported in the statement of profit or loss of the company for the year ended 30 June 20X9 (to the nearest $'000)? Answer is 437