Question

Teal 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 $3,478,400 of 11 % 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 % . Click here to view factor tables As the controller of the company, determine the selling price of the bonds. (Round foctor values to 5 decimal places, e.s. 1.25124 and final answer to 0 decimal places, eg. 458,581) $ Selling price of the bonds

Answer 1

we have to use financial calculator to solve this problem
put in calculator -
FV		3478400
PMT	3478400*11%/2	191312
N	15*2	30
I	12%/2	6.00%
compute PV		($3,239,002)
therefore selling price =		$3,239,002