Below is the first table, exactly as it appears in Determination G3.
Period Ending |
Principal Outstanding |
Income in Respect of Period |
Payments Received at End of Period |
15-05-1987 |
$1,012,500 |
$28,815 |
$70,000 |
15-11-1987 |
$971,315 |
$78,826 |
$70,000 |
15-05-1988 |
$980,141 |
$79,542 |
$70,000 |
15-11-1988 |
$989,638 |
$80,317 |
$1,070,000 |
Total |
|
$267,500 |
$1,280,000 |
The periods are split into six monthly intervals.
The total capital gain held by our investor over the whole investment period was:
($1,280,000 - 4x$70.000) - $1,012,500 = -$12,500 (i.e.
a capital loss)
But the IRD table is showing income higher than the coupon rate received (i.e.
our bondholder has received a 'capital gain').
(Note: That IRD determination example was made and published way back on 13th May 1987).