a.

The proceeds from the bond issue is 55,361,225

b. Please refer to the table below.
c. Please refer to the table below.
d. The amounts charged to income every year differ because the interest expense under
the fair value method changes when there are movements in the market as seen in the
changing interest rate every year. Under the amortized cost method, the amount that will be
charged to income over time is fixed at the issuance of the bond. It's merely distributed or
amortized over the bond term.

Explanation:
A. Proceeds from the bond issue
1. Layout the cash flows based on their timing. Since this is a three-year loan, the principal
would be repaid in year 3. Interest is also computed and paid out on an annual basis.
2. Compute the present value factor at issue date for each period. The present value factor
may be computed / referenced to a present value table.
3. Multiply the cash flows with the present value factor to get the present value of each
period's cash flows.
4. Sum it all up to get the proceeds at issue date.
 
You may refer to the detailed calculations below:

 
Step 2: Using the amortized cost method
1. The face value of the bond less the proceeds is what we call bond discount since the
face is greater than the proceeds. This amount is amortized during the term of the loan.
Please refer to the loan amortization schedule below:

The beginning value in Year 0 is equal to the proceeds of the loan. As you can see in year
1, the interest payment is equal to the face value of 60m multiplied by the coupon rate of
5%. The interest expense on the other hand is based on the beginning value of the bond
multiplied by the effective interest rate when the loan was issued (8%). The difference
between the interest payment and interest expense is what we call the amortization. And to
check whether this schedule is correct, the carrying value of the bond at the end of its term
should equal to 0.
 
Step 3: Using the fair value method
Under the fair value method, the carrying value of the bond resets every end of the period to
its fair value. Fair value is computed similar to how we calculated the proceeds but now, we
have to use the effective interest rate in that period and the REMAINING cash flows. Note
that we only get the present value of the remaining cash flows at the end of each period. 

Here are the computations at the end of year 1 and year 2. 
 
End of year 1

At the end of year 1, the carrying value is equal to the face value of the bond since the
effective interest rate is equal to the coupon rate of 5%.
 
End of year 2

At the end of year 2, the carrying value is greater than the face value of the bond since the
effective interest rate is less than the coupon rate of 5%.
 
End of year 3
The fair value at the end of year 3 is 0 since the bond has already been fully paid
 
The table below summarizes the bond amortization schedule.

 
Step 4: Please refer to the explanation above.