Pencil Corp is looking to issue a bond to raise capital for expanding their product line to include mechanical pencils. The company needs to raise $250,000 which will be paid back over a 10 year time frame. Bond rates can be issued at 3%, 6% or 7%, with a higher assurance of investors with the higher rate. If a high enough rate is not offered, Pencil Corp runs the risk of not raising the necessary capital. However, the CFO does not want to spend more in bond interest than necessary, and wants repayment amounts to fit within budget for the expansion project. Create an amortization table for the expense. How much would be paid in interest for each interest rate scenario? What rate would you choose and why? (Hint: Determine future value first)

PV =	$2,50,000.00
I/YR =	6%
N =	10
FV = PV(1+I)^N =

Years:	Interest Rate
	3%	6%	7%
0
1
2
3
4
5
6
7
8
9
10

Interest Paid: