3. Chapter 11: Long-term liabilities 1. Assume Pea transportation on January 1,2016, issues $120,000 of 10% bonds, due in five years, which interest payable annually at year-end. The purchase of the bonds would receive the following two types of payments: (a). Principal of $120,000 to be paid at maturity; and (b) payment of coupon rate, five times of $12,000 interest payments (4120,000 x 10%) over the term of the bonds. Instructions: How much the total Present Value of the bonds? a. Assume coupon rate is 10% per annum, amd market rate is also 10% per annum? b. Assume coupon rate is constant, but market interest rate increase to be 12% per annum? c. Assume coupon rate is constnt, but market interest rate decreasedto be 8% per annum. 3.2. Terminologies: explain clearly those items 1. Maturity date; 2. Callable bonds; 3. Face value; 4. Debt to Asset ratio; 5. Convertible bonds; 6. Mortgage bond