Selling price of the
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Larkspur 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, 2025, due on March 1,
2040, with interest payable each March 1 and September 1. 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.)
LA
Selling price of the bonds $
SUP
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