Make- It- Big Corporation is planning to build a new factory costing $ 2,000,000. On January 1, 2016, Make- It- Big plans to issue bonds in the amount of $ 1,800,000 that will be paid in five years. Interest of $ 45,000 will be paid semiannually each January 1 and July 1 with the first interest payment at the end of the period on July 1, 2016.
Required
a. If the market rate of interest is 6%, will Make- It- Big raise enough to build the factory?
b. If the market rate of interest is 2%, will Make- It- Big raise enough to build the factory?