Cornell & Company Approached an Underwriter to Discuss the Possibility

question 107

Essay

Cornell & Company approached an underwriter to discuss the possibility of issuing bonds.Cornell needs to raise $2,000,000 for expansion purposes.The terms of the bond issue have been finalized as follows:
$$\begin{array} { l l } \text { Principal amount } & \$ 2,000,000 \\\text { Contract interest rate } & 9.5 \% \\\text { Length of time } & 10 \text { years } \\\text { Issue date } & \text { January 2, 2017 } \\\text { Interest payment dates } & \text { July 1 and December 31 }\end{array}$$ Assume the bonds were issued on January 2,2017,when the market interest rate was 10%.
a_Determine the issue price of the bonds.
b_Did Cornell & Company receive the $2,000,000 it needed for expansion? Why or why not?

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Definitions:

Chromosomes

Thread-like structures located inside the nucleus of animal and plant cells, made of protein and a single molecule of DNA, carrying genetic information in the form of genes.

Introns

Non-coding sections of DNA within a gene that are removed during mRNA processing before protein synthesis.

Exons

Sections of a gene that are expressed in the coding of a protein, interspersed with introns, which are spliced out before translation.

mRNA Transport

The process of moving messenger RNA (mRNA) molecules from the nucleus to the cytoplasm in eukaryotic cells, where they direct protein synthesis.