Waltman Company manufactures exercise 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 exercise equipment. After a careful evaluation of the request, the board of directors has decided to raise funds for the new plant by issuing $3150000 of 15% bonds on March 1, 2020, due on March 1, 2035, with interest payable each March 1 and September 1. At the time of issuance, the market interest rate for similar financial instruments is 14%. What is the selling price of the bonds? (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
|Bond Selling Price||$3,345,587|
|Bond Price formula||=C*[1-[1/(1+i)n]/i+M/(1+i)n|
|Bond Selling Price||= 236250*(1-1/(1+0.07)^30)/0.07+3150000/(1+0.07)^30||=||3,345,587|
|= 2,933,808+ 411,779|
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