1) The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 15 years. The bond certificate indicates that the stated coupon rate for this bond is 7% and that the coupon payments are to be made semiannually. (2 pts)

a. Assuming the appropriate YTM on the Sisyphean bond is 7.3%, how much will each semiannual coupon payment be?

b. What is the price that this bond will trade at?

c. Will it trade at par, discount or premium?

2) Smith Industries currently sells an energy efficient refrigerator with a water filter, the Greene for $700. As SI is about to come out with a new model in 2016, they are planning to lower the selling price to $590. The current cost of goods sold for the Greene is $285. At the current price point, 18,000 unit sales are expected.(2pts)

a. If SI decided today to reduce the price, sales are projected to increase by 50%. What would be the incremental impact on this years EBIT of such a price drop?

b. With each refrigerator, SI expects an additional $55 in water filter sales. As their water filter plant has just become automated, they are able to operate at a gross profit margin of 85% on each filter. What is the incremental impact on EBIT for the water filter sales?