Other Financing Options: Valley Medical Center while in the process of deciding on whether to lease the surgical robot was also involved in a large debt issuance. VMC management decided to go out to the market for a $193,900,000 debt borrowing. A majority of the cash from the debt borrowing would be used for infrastructure improvements and additions. A certain amount of funds are to be used for equipment. While not originally on the list of items to be acquired with debit funding, money could be reallocated from the general amounts to be used for 'medical equipment'. The debt schedule is as follows: Debt Service Schedule from Bond Prospectus: Principal Interest Payment Face Rate Yield 1 6/30/2017 2 6/30/2018 3 6/30/2019 3,777,860.00 3,777,860.00 9,645,600.00 9,645,600.00 9,645,600.00 9,590,600.00 9,645,600.00 4 6/30/2020 5 6/30/2021 6 6/30/2022 1.94 % 2,750,000.00 12,340,600.00 4.00% 2.21 % 2,190,000.00 4.00% 9,491,800.00 11,681,800.00 1,565,000.00 7,930,000.00 5.00% 2.44% 9,408,875.00 10,973,875.00 5.00 % 5.00 % 7 6/30/2023 9,171,500.00 17,101,500.00 2.63% 8 6/30/2024 9 6/30/2025 10 6/30/2026 11 6/30/2027 12 6/30/2028 8,325,000.00 8,765,125.00 17,090,125.00 2.81% 8,735,000.00 8,338,625.00 17,073,625.00 5.00% 2.99% 5.00 % 3.13 % 9,175,000.00 7,890,875.00 17,065,875.00 9,635,000.00 10,110,000.00 7,420,625.00 17,055,625.00 5.00% 3.23% 5.00 % S.00 % 5.00 % 6,927,000.00 17,037,000.00 3.33% 13 6/30/2029 10,610,000.00 6,409,000.00 17,019,000.00 3.45% 14 6/30/2030 11,150,000.00 5,865,000.00 17,015,000.00 3.53% 15 6/30/2031 16 6/30/2032 17 6/30/2033 18 6/30/2034 19 6/30/2035 11,705,000.00 5,293,625.00 16,998,625.00 5.00% 3.59 % 12,290,000.00 4,693,750.00 16,983,750.00 5.00% 3.66% 12,905,000.00 4,063,875.00 16,968,875.00 5.00% 3.72% 13,545,000.00 3,402,625.00 16,947,625.00 5.00% 3.78% 14,220,000.00 2,708,500.00 16,928,500.00 5.00 % 3.84% 20 6/30/2036 14,930,000.00 1,979,750.00 16,909,750.00 3.89 % 5.00% 21 6/30/2037 22 6/30/2038 15,675,000.00 1,214,625.00 16,889,625.00 5.00 % 3.93% 16,455,000.00 411,375.00 16,866,375.00 3.97% 193,900,000.00 136,116,210.00 330,016,210.00 Final Cash Received as provided by bond underwriters: Funds Received 215,523,593.70 6. a. Produce the journal entry for the issuance of the bonds on 6/30/2017 b. What was the effective interest rate (market rate) of the bonds? c. Discuss 3 advantages/disadvantages of financing through the seller or using internal financing