Lance Armstrong Inc. manufactures cycling equipment. Recently the vice president of operations of thecompany has requested construction of a new plant to meet the increasingdemand for the companyâ&Acir &A cirs bikes. After a careful evaluation of therequest, the board of directors has decided to raise funds for the newplant by issuing $2,000,000 of 11% term corporate bonds on March 1,2003, due on March 1, 2018, with interest payable each March 1 andSeptember 1. At the time of issuance, the market interest rate forsimilar financial instruments is 10%.
Instructions
As the controller of the company, determine the selling price of the bonds.