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I have provided the answer that was provided but it doesn't calculate correctly.

In relation to calculating

$10,000,000 x (1 - (1 + 0.07)-4)/ 0.07 its giving me the answer of 33,872,112.56 I tried different ways to input data into calculator and getting different answers.

I then tried 1-(1+0.07)^-4 to check to see if I get 0.0675564 as shown in the answer and I'm getting 0.237104788.

also, another response on Chegg provides an answer of $9,351,790, how are 2 experts getting 2 different answers and providing different workings.

And before I get feedback in the way I insert the data, please understand I inserted the data exactly how instructed from Cheggs expert.

Please provided the correct answer and detailed responses as this is not acceptable. I am paying for a service to provided me reliable assistance from experts to provide me with guidance but unfortunately that is not the case.

Question

Malibu Ltd issues $10 million of convertible bonds on 1 July 2022. The bonds have a life of four years and they offer interest, payable at the end of each financial year, at a rate of 7 per cent per annum. The bonds are issued at their face value and each bond can be converted into one ordinary share in Malibu Ltd at any time in the next four years. Organisations of a similar risk profile have recently issued debt with similar terms, without the option for conversion, at a rate of 9 per cent per annum. Required:

a) Identify the present value of the bonds and, allocating the difference between the present value and the issue price to the equity component, provide the appropriate accounting entries.

b) Calculate the stream of interest expenses across the four years of the life of the bonds.

c) Provide the accounting entries if the holders of the bonds elect to convert the bonds to ordinary shares at the end of the third year of the bonds.

a) Present Value and Equity Component Present Value of Bonds Explanation: The present value of the bonds is the amount that Malibu Ltd would need to pay today to settle all future cash flows associated with the bonds. The present value of a debt instrument is calculated using the following formula: Present Value = Face Value * (1(1+InterestRate)( Number of Periods ))/ Interest Rate In this case, the face value is $10 million, the interest rate is 7% per annum, and the number of periods is four years. Plugging these values into the formula, we get: Present Value =$10 million 0.071(1+0.07)4 Present Value =$10million0.070.675564 Present Value =$9.65 million Equity Component The equity component is the difference between the present value of the bonds and the issue price. In this case, the issue price is also $10 million, so the equity component is: Equity Component =$10 million $9.65 million Equity Component =$0.35 million

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