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oond pays 14 percent interest, and it ayears remaining until maturity. The current yield to maturity on similar bonds is 12 percent. Compute the new price of the bond and comment on whether you think it is overpriced in the marketplace. 13. Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These EFf mat pric (LC bonds had a 25-year life when issued and the annual interest payment was then 15 percent. This return was in line with the required returns by bondholders at that point as described next: Real rate of return Inflation premium Risk premiun. 4% 6 5 15% Total return Assume that five years later the inflacon premium is only 3 percent and is appropriately reflected in the required return (or yield to maturity) of the bonds. The bonds have 20 years remaining until maturity. Compute the new price of the bond. 14. Katie Pairy Fruits Inc. has a $1,000 20-year bond outstanding with a nominalA yield of 15 percent (coupon equals 15% $1,000 = $150 per year). Assume that the current market required interest rate on similar bonds is now only 12 percent. a. Compute the current price of the bond. b. Find the present value of 3 percent X $1,000 (or $30) for 20 years at (L