Mocha-Cola Company is seeking additional debt financing for operations. It anticipates the interest rate required by lenders to be 6%. Mocha-Cola will provide cash flow to investors of $80,000 semi-annually on March 31 and September 30, for the next five years. In addition, it will pay a lump sum cash payment of $2,000,000 at the end of five years. What is the present value of this debt on October 1?

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Solution We need to calculate the present value of the cash flows As the ... View the full answer