Question 1 george hincapie inc manufactures cycling, Ask an Expert

Accounting

Question: 1) 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 bikes. After a careful evaluation of the request, the board of directors has decided to raise funds for the new plant by issuing $3,444,000 of 12% term corporate bonds on March 1, 2014, due on March 1, 2029, with interest payable each March 1 and September 1. At the time of issuance, the market interest rate for similar financial instruments is 10%

a) What is the selling price of the bonds?

2) Alan Jackson invests $43,500 at 10% annual interest, leaving the money invested without withdrawing any of the interest for 10 years. At the end of the 10 years, Alan withdraws the accumulated amount of money.

a) Compute the amount Alan would withdraw assuming the investment earns simple interest

b) Compute the amount Alan would withdraw assuming the investment earns interest compounded annually.

c) Compute the amount Alan would withdraw assuming the investment earns interest compounded semiannually.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92710040

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