Bramble Inc. manufactures cycling equipment. Recently, the vice president of operations of the...
Question:
Bramble Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested the 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 $3,478,400 of 11% term corporate bonds on March 1, 2020, due on March 1, 2035, with interest payable each March 1 and September 1, with the first interest payment on September 1st, 2020. 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.
Bonds:
Companies issue bonds to raise funds for their long-term goals, like constructing new plants to meet their customers' increasing demands for their products.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerTo determine the selling price of the bonds, calculate the present values of the coupon payments and the face value by considering the following...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
How to Price Bonds: Formula & Calculation
from
Chapter 1 / Lesson 5
6.1K
Bonds are loans with fixed interest rates and time periods, and are valued by factoring in the future value of the bond and comparing it to the general market. Discover how to price bonds and see how factors like coupon rate, duration, and credit quality are used when calculating the worth of a bond.
Related to this Question
- Larkspur Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested the construction of a new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request, the boa
- Shamrock Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested the construction of a new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request, the boa
- Lou Inc. manufactures cycling equipment. Recently the vice president of operations of the company has requested the 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
- Pina Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested the construction of a new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request, the board o
- Frank Worldwide Inc. manufactures cycling equipment. Recently the vice-president of operations of the company has requested the construction of a new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request, t
- Mallard Inc. manufactures cycling equipment. Recently the vice president of operations of the company has requested the construction of a new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request, the board
- Messier Inc. manufactures cycling equipment. Recently the vice president of operations of the company has requested the construction of a new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request, the board
- A company 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. Aft
- Bridgeport Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested the construction of a new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request, the b
- Sunland 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.
- George Hincapie Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested the construction of a new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request,
- Ayayai 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. A
- George Hincapie 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
- Katarina Witt, Inc. manufactures skating equipment. Recently, the Vice President of Operations of the company his requested construction of a new plant to meet the increasing needs for the company's skates. After a careful evaluation of the request, the b
- Riders Corporation manufactures bicycles. To meet the increased demand for its bicycles recently it acquired land and equipment and entered into a contract with a construction company to construct a new factory. Below are the details of expenses Riders in
- Moore Industries manufactures exercise 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 exe
- Katarina Witt, Inc. manufactures skating equipment. Recently the Vice President of Operations of the company has requested construction of a new plant to meet the increasing needs for the company's sk
- Bike Inc. is a small company that builds bicycles on orders with customer specifications and carries out its operations in a small store that was a warehouse. The parts and parts of the bicycles are supplied by different manufacturers. Some of the costs i
- Thousand Islands Company produces a variety of electric scooters. Management follows a pricing policy of manufacturing cost plus 60 percent. In response to a request from Northern Cycles, LLC, the fol
- Green Golf, Inc. is considering the purchase of new automated club assembly equipment. The industrial engineer for the company thinks that she has determined the best choice. However she is uncertain how to evaluate the equipment because of questions conc
- Sports Specialty Inc. produces a bicycle that it normally sells wholesale for $250 per bike. The variable costs of production are $160 and the fixed cost for this product line is $154,000 per month. The company has been selling this product at a rate of 2
- Sports Specialty Inc. produces a bicycle that it normally sells wholesale for $275 per bike. The variable costs of production are $188 and the fixed cost for this product line is $185,000 per month. The company has been selling this product at a rate of 2
- Triad Corporation has established a joint venture with Tobacco Road Construction, Inc., to build a toll road in North Carolina. The initial investment in paving equipment is $80.5 million. The equipme
- Sports Specialty Inc. produces a bicycle that it normally sells wholesale for $250 per bike. The variable costs of production are $160, and the fixed costs for this product line are $154,000 per month. The company has been selling this product at a rate o
- You have been asked by the president of the Farr Construction Company to evaluate the proposed acquisition of a new earth mover. The mover's basic price is $50,000, and it would cost another $10,000 to modify it for special use. Assume that the mover fall
- Mobile Solutions Company produces a variety of electric scooters. Management follows a pricing policy of manufacturing cost plus 60 percent. In response to a request from Northern Cycles, LLC, the fol
- EyeGuard Equipment Inc. (EEI) manufactures protective eyewear for use in commercial and home applications. The product is also used by hunters, home woodworking hobbyists, and in other applications. T
- Cornucopia Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 4,000 units at $68 each. The new
- The John Fletcher Corporation manufactures mountain bikes. At the beginning of July, the Fletcher Corporation had $0 of beginning bikes in inventory. The corporation expects to manufacture and sell 100 bikes in July. Each bike requires a standard quantity
- Cornucopia Inc. is looking to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 4,000 units at $68 each. The new m
- Consolidated Industries is studying the addition of a new valve to its product line. The valve would be used by manufacturers of irrigation equipment. The company anticipates starting with a relatively low sales volume and then boosting demand over the ne
- Maddox Specialty Company, a division of Lost World Inc., manufactures three models of gear shift components for bicycles that are sold to bicycle manufacturers, retailers, and catalog outlets. Since t
- Maddox Specialty Company, a division of Lost World Inc., manufactures three models of gear shift components for bicycles that are sold to bicycle manufacturers, retailers, and catalog outlets. Since b
- Swasey Fabrication, Inc., manufactures frames for bicycles. Each frame passes through three processes: Cutting, W
- Rhodes, Inc., is a fast-growing start-up firm that manufactures bicycles. The following income statement is available for July: |Sales Revenue (190 nits @ $540 per unit)|$102,600 |Less:| |Manufacturi
- Valuation of Return Napali Inc. sells new equipment with a $5,300 list price. A dissatisfied customer returned one piece of equipment. Napali determines that the returned equipment can be resold if it is reconditioned. The expected sales price of the reco
- PlayTime, Inc., is a leading manufacturer of sporting equipment. The company is in the process of evaluating the best use of its Plastics Division, which is currently manufacturing molded fishing tack
- Anthony Herrera, president of Retro Recreation Products, Inc., is concerned about declines that he is beginning to see in the demand for the company's line of old school logo basketballs as new competitors enter the market. At a current contribution margi
- Sports Specialty Inc. produces a bicycle that it normally sells wholesale for $250 per bike. The variable costs of production are $160 and the fixed cost for this product line is $154,000 per month. T
- Marigold Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2017, to expand its production capacity to meet customers' demand for its product. Marigold issues a(n) $
- Fugate Inc. is considering these two alternatives to finance its construction of a new $2,219,000 plant: 1. Issuance of 221,900 shares of common stock at the marke
- Armstrong Helmet Company manufactures a unique model of a bicycle helmet. The company began operations on December 1, 2013. Its accountant quit the second week of operations, and the company is searching for a replacement. The company has decided to test
- Flint Inc. decided to purchase equipment from Central Michigan Industries on January 2, 2017, to expand its production capacity to meet customers' demand for its product. Flint issues a(n) $912,000, 5-year, zero-interest-bearing note to Central Michigan f
- The Regal Cycle Company manufactures dirt bikes, mountain bikes, and racing bikes. Data on sales and expenses for the past quarter follow: Management is concerned about the
- Palinkas Cane Products Inc. processes sugar cane in batches. The company buys a batch of sugar cane from farmers for $80 which is then crushed in the company's plant at a cost of $11. Two intermediate products, cane fiber and cane juice emerge from the cr
- Shamrock Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2017, to expand its production capacity to meet customers? demand for its product. Shamrock issues a(n) $
- The following events took place for Bridger Bikes Inc. during July 20Y6, the first month of operations, as a producer of road bikes. a. Purchased $340,000 worth of materials. b. Used $329,000 of direct materials in production. c. Incurred $160,000 of dire
- Alaska, Inc., would like to acquire Estoya Corp., which is located in Peru. In initial negotiations, Estoya has asked for a purchase price of 1 billion Peruvian new sol. If Alaska completes the purchase, it would keep Estoya's operations for 2 years and t
- Prudence Inc. is engaged in manufacture and sale of specialized manufacturing equipment. It has excess capacity of 30% so on January 1, 2017 the company's management sold equipment worth $20 million to Uncertainty, Inc. a company which is facing a liquidi
- For some time, Ulrich Inc. has maintained a policy of acquiring company equipment by leasing. On January 1, 2015, Ulrich entered into a lease with Riverbottoms Fabricators for a new concrete truck tha
- The Regal Cycle Company manufactures three types of bicycles - a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow Required: 1. What is the financ
- An executive from a large merchandising firm has called your vice-president for production to get a price quote for an additional 100 units of a given product. The vice-president has asked you to prep
- You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $50,000. The truck falls into the MACRS 3-year class, and it will be sold a
- You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $190,000. The truck falls into the MACRS 5-year class, and it will be sold
- You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $420,000. The truck falls into the MACRS 5-year class, and it will be sold
- You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $70,000. The truck falls into the MACRS 3-year class, and it will be sold
- You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $120,000. The truck falls into the MACRS 7-year class, and it will be sold
- A bicycle store uses a continuous review system to replenish its inventory of bicycles, and it makes periodic orders of 340 bicycles, which is the optimal quantity. To what new order quantity should the store switch if the demand for its bicycles increase
- Nature's Way Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 7,400 units at $38 each. The ne
- Nature's Way Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 2,500 units at $60 each. The ne
- Several months ago, Reiltz Industries, Inc. experienced a hazardous materials spill at one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $570,000. The company is contesting the fine. In addition, an employee is se
- Nature's Way Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 2,500 unit
- Gierlach Beet Processors, Inc., processes sugar beets in batches. A batch of sugar beets costs $53 to buy from farmers and $15 to crush in the company's plant. Two intermediate products, beet fiber an
- Gierlach Beet Processors, Inc., processes sugar beets in batches. A batch of sugar beets costs $39 to buy from farmers and $13 to crush in the company's plant. Two intermediate products, beet fiber an
- Safe Ride, Inc. produces air bag systems that it sells to North American automobile manufacturers. Although the company has a capacity of 300,000 units per year, it is currently producing at an annual rate of 180,000 units. Safe Ride, Inc. has received an
- The company specializes in manufacturing a unique model of a bicycle helmet. The model is well accepted by consumers, and the company has enough orders to keep the factory production at 10,000 helmets
- Lasse Inc. manufactures 2 products, hammers and screwdrivers. The company has estimated its overhead in the assembling department to be $165,000. The company produces 300,000 hammers and 600,000 screwdrivers each year. Each hammer uses 2 parts, and each s
- The Hedge Corporation manufactures only one product: planks. The single raw material used in making planks is the dint. For each plank manufactured, 12 dints are required. Assume that the company manufactures 150,000 planks per year, that demand for plank
- Fiber Technology, Inc., manufactures glass fibers used in the communications industry. The company's materials and parts manager is currently revising the inventory policy for XL-20, one of the chemi
- Armstrong Corporation manufactures bicycle parts. The company currently has a $19,900 inventory of parts that have become obsolete due to changes in design specifications. The parts could be sold for
- Gierlach Beet Processors, Inc. processes sugar beets in batches. A batch of beets costs $27 to buy from farmers and $17 to crush in the company's plant. Two intermediate products, beet fiber and beet
- Bespoke, Inc. offers warranties on all their bikes. They estimate warranty expense at 44% of sales. At the beginning of 2017, the Estimated Warranty Payable account had a credit balance of $2,000. Dur
- Maripose, Inc., produces machine tools and currently uses a plantwide overhead rate, based on machine hours. Harry Whipple, the plant manager has heard that departmental overhead rates can offer signi
- Nature's Way Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 2,500 units at $60 each. Determ
- Stinehelfer Beet Processors Inc, processes sugar beets in batches. A batch of sugar beets coss $55 to buy from farmers and $17 to crush in the company's plant. Two Stinehelfer intermediate products, b
- Accelerator, Inc., manufactures a fuel additive, Stomp, that has a stable selling price of $44 per drum. The company has been producing and selling 80,000 drums per month. In connection with your examination of Accelerator's financial statement for the y
- Thomas Corporation makes bicycles. It has always purchased its bicycle tires from the Firelock Company at $11 each, but is currently considering making the tires in its own factory. The estimated cost
- U-RIDE, Inc. currently produces the electric engines that are used in golf carts made and sold by the Company. Electco has offered to sell the electric engines to U-RIDE at a price of $200 each. Curre
- Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land 6 years ago for $4 million in anticipation of using it as a
- Electric Company, a manufacturer of snowmobiles, is operating at 70% of plant capacity. Electric's plant manager is considering making the headlights now being purchased from a outside supplier for $11 each. The Electric plant has idle equipment that woul
- To fulfill the rising demand for prototype manufacturing your company is considering purchasing a new set of machine tools that will be dedicated to these small scale prototype production runs. The fo
- Pronghorn Company's organization chart includes the president; the vice president of production; three assembly plants ? Dallas, Atlanta, and Tucson; and two departments within each plant ? Machining
- The demand for solvent, one of the numerous products manufactured by Heyward Industries Inc., has dropped sharply because of recent competition from a similar product. The company's chemists are curre
- Armstrong Corporation manufactures bicycle parts. The company currently has a $19,500 inventory of parts that have become obsolete due to changes in design specifications. The parts could be sold for $7,000 or modified for $10,000 and sold for $20,300. R
- A company currently produces an electric motor at its main manufacturing facility in Dayton Ohio The motor's cost when produced at the Dayton plant is 13882 per motor The company is currently consider
- A sports nutrition company is examining whether a new high-performance sports drink should be added to its product line. A preliminary feasibility analysis indicated that the company would need to invest $17.5 million in a new manufacturing facility to p
- The ABC Company performs its expenditure cycle activities using its integrated ERP system as follows: Employees in any department can enter purchase requests for items they note as either out of stoc
- Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land 9 years ago for 6 million dollars in anticipation of using
- Health Kick Cereal Company manufactures breakfast cereals. In response to consumer demand, the company wants to begin producing gluten-free cereals. In order to do this the company will have to separa
- General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product manufactured at the Arizona site, an impairment test is deemed appropriat
- The president of the retailer Prime Products has just approached the company's bank with a request for a $30,000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in payin
- The president of the retailer Prime Products has just approached the company's bank with a request for a $53,000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying
- Sinclair Company is considering the purchase of new equipment to perform operations currently being performed on different, less efficient equipment. The purchase price is $250,000, delivered installed. A Sinclair production engineer estimates that the ne
Explore our homework questions and answers library
Browse
by subject