Donnelly Consulting Inc. is considering raising additional capital. Donnelly pla

Question

Donnelly Consulting Inc. is considering raising additional capital. Donnelly plans to raise the capital by issuing $ 700,000 of 8 %, seven minus year bonds on January 1, 2015 . The bonds pay interest semiannually on June 30 and December 31. On January 1, 2015 , the market rate of interest required by investors for similar bonds is 10 %.

Requirement 2. Calculate and record the cash received on the bond issue date.

Begin by calculating the cash received on the bond issue date. (Use the factor tables provided with factors rounded to three decimal places. Round all currency amounts to the nearest whole dollar.)

Upon issuance of the bonds on January 1, Donnelly will receive cash of _____

Explanation / Answer

Upon issuance of the bonds on January 1, Donnelly will receive cash of _____

Issue price = (700000*4%*9.899+700000*.505)

= 630672

Issuance of the bonds on january 1, Donnely will receive cash of $630672

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