8 Bond Valuation. MacIntyre Industries issued a £100 par value 20 year bond with a 10 per cent coupon five years ago.

(a) Assuming annual interest payments, what is the value of the bond today if the required rate of return is currently: (i) 8 per cent; (ii) 10 per cent; and (iii) 12 per cent? Your answer should show for each case whether the bond is trading at a premium, par or at a discount.

(b) What is the value of the bond, using its coupon rate, if interest is paid semiannually?

(c) If the bond is currently trading at £108, calculate its yield to maturity (YTM)—to the nearest whole per cent.