Question
3. 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
3. 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 skates.After a careful evaluation of the request, the board of directors has decided to raise funds for the new plant by issuing $2,000,000 of 11% term corporate bonds on January 1, 2006, due on January 1, 2016, with interest payable each January 1 and July 1.At the time of issuance, the market interest rate for similar financial instruments is 10%.
a. As the controller of the company, determine the selling price of the bonds (round to the nearest one):
$____________
b. Did the bonds sell at a premium or discount?
_____________
c. Determine the amount of Premium/Discount at date of issuance:
$_____________
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