Hello - In this problem:
6-13 (Computation of Bond Liability) Messier Inc. manufactures cycling equipment. Recently, the
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 $3,000,000 of 11
bonds on March I, 2012, due on March 1,2027, with interest payable each March 1 and September 1.
At the time of issuance, the market interest rate for similar financial instruments is 10%.
As the controller of the company, determine the selling price of the bonds.
Formula for the interest payments:
PV - OA = R (PVF - OA
PV - OA = $165,000 (PVF - OA
PV - OA = $165,000 (15.37245
Where does the $165,000 amount come from?