2. To finance the growth in its operations, ACC Inc. needs to raise additional capital. Ben and his group decided to issue two bonds for this purpose. Bond N-ACC Inc. wants to issue $500,000,000 worth of bonds. These bonds have $1,000 par value, a time to maturity of 20 years, and a 10% coupon rate. Bond N makes semi- annual coupon payments. These bonds are issued at par value today. Bond P - ACC Inc. wants to issue $100,000,000 worth of pure discount bonds with 7-years to maturity. These bonds also have $1,000 par value. Bond P is issued at a yield to maturity of 8% today. a. The ACC Inc. is an old and very large company thus its credit rating is very high. Its existing bonds have a credit rating of AAA. However, this new project is riskier compared to its ongoing productions. As a result, Bond N is issued with a credit rating of A. Given this information, briefly discuss the relationship between the yields on company's existing 20-year bonds and Bond N at the time of its issue. b. State the yield to maturity on Bond N. c. Calculate the price of Bond P today. d. Suppose a year has passed and the yield to maturity on Bond N changed to 12%. Calculate the price of Bond N in the market at that time. e. Calculate Bond N's current and capital gains yields in the last year. f. Suppose two more years have passed and the rating agencies has changed the credit rating of Bond N to AA today. These bonds are trading in the market at a price of $1,086.23. i. Briefly discuss a reason for the change in the price of Bond N. ii. Calculate the yield to maturity for Bond N. iii. Briefly discuss if it is possible for Bond P to trade at a price above par as well