Purchase Solution

Selling price of the bonds

Not what you're looking for?

Ask Custom Question

I am having trouble with bonds.

Messier 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 $3,000,000 of 11% term corporate bonds on March 1, 2010, due on March 1, 2025, with interest payable each March 1 and September 1. At the time of issuance, the market interest rate for similar financial instruments is 10%.

Instructions: As the controller of the company, determine the selling price of the bonds.

Purchase this Solution
Solution Summary

The solution explains how to determine the selling price of the bonds

Solution Preview

The selling price of the bonds is the present value of interest and principal discounted at the market rate of interest. The semi annual interest paid on the bonds ...

Purchase this Solution
Free BrainMass Quizzes
Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

View More Free Quizzes
Related BrainMass Solutions

  • Bonds

    What is the current price of the bonds? Since the bonds are selling at par, price=$1000 c What is current yield? Current yield = Coupon payment / Mkt price= $120/$1000 =12% d What is the yield to maturity?

  • Buying 10-Year Bonds

    If the current price of the bonds is $1,077.02, what is the yield that Trevor would earn by selling the bonds today?

  • Convertible Bonds and YTM Issue

    The bonds have a conversion ratio of 40. When the bonds were issued the company's stock price was $14.50. Today (October 22, 2009) the stock price is $32.00 per share. A.

  • The Importance of Bonds Yields and Prices Over Time & Their Valuations

    3) Now, six years after the original date of issuing for these bonds, the interest rate on similar bonds has peaked at 14 percent. What is the new selling price today?

  • finance

    249491 Finance Two years ago bonds were issued with 10 years until maturity, selling at par, and a 7% coupon. If interest rates for that grade of bond are currently 8.25%, what will be the market price of these bonds?

  • Capital Structure Weights and Selling Security

    We first calculate the market values and then the weights Market value of equity = Price per share X number of shares = 55 X 4,000,000 = 220,000,000 Market value of debt = Price per bond X number of bonds = 1,000 par X 94% price X 7,000 = 6,580,000

  • Bond Valuation

    If the required return on the two bonds rose 10%, what would the bonds' prices be? a. If both bonds had a required return of 8%, what would the bonds' price be?

  • Calculate selling price of bonds

    Please see the attached file for excel. The solution explains how to calculate the selling price of bonds

  • Laser Electronics Company

    The bonds are currently selling at a conversion premium of $60 over their conversion value.

View More Related Solutions