Indigo Inc. manufactures cycling equipment. Recently, the vice president of oper
ID: 2609350 • Letter: I
Question
Indigo 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 $3,155,200 of 10% 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 12%.
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1. As the controller of the company, determine the selling price of the bonds.
Explanation / Answer
Working:
Price of the bond 2747990