Ivanhoe Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested...

 

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Ivanhoe 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 $3,128,500 of 12% 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 8%. 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 Your client, Albert Davis Leasing Company, is preparing a contract to lease a machine to Souvenirs Corporation for a period of 25 years. Davis has an investment cost of $428,700 in the machine, which has a useful life of 25 years and no salvage value at the end of that time. Your client is interested in earning an 12 % return on its investment and has agreed to accept 25 equal rental payments at the end of each of the next 25 years. Click here to view factor tables. You are requested to provide Davis with the amount of each of the 25 rental payments that will yield an 12% return on investment. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) Amount of each rental payments $ Ivanhoe 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 $3,128,500 of 12% 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 8%. 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 Your client, Albert Davis Leasing Company, is preparing a contract to lease a machine to Souvenirs Corporation for a period of 25 years. Davis has an investment cost of $428,700 in the machine, which has a useful life of 25 years and no salvage value at the end of that time. Your client is interested in earning an 12 % return on its investment and has agreed to accept 25 equal rental payments at the end of each of the next 25 years. Click here to view factor tables. You are requested to provide Davis with the amount of each of the 25 rental payments that will yield an 12% return on investment. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) Amount of each rental payments $

Answer rating: 100% (QA)

To determine the selling price of the bonds we can use the present value of an ordinary annuity form... View the full answer