Exercise 6-13 Riverbed Inc. manufactures cycling equipment. Recently, the vice p

Question

Exercise 6-13 Riverbed Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested construction of a new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request, the board of directors has decided to raise funds for the new plant by issuing $3,066,000 of 12% term corporate bonds on March 1, 2017, due on March 1, 2032, with interest payable each March 1 and September 1, with the first interest payment on September 1st, 2017. At the time of issuance, the market interest rate for similar financial instruments is 10%, Click here to view factor tables As the controller of the company, determine the selling price of the bonds. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) Selling price of the bonds s

Explanation / Answer

Amount PV factor Present value Semi-annual interest 183960 15.37245 2827916 Principal 3066000 0.23138 709411 Total 3537327 Selling price of the bonds = $3537327

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