(3 Marks) A couple borrows $15,000 to be repaid with monthly payments over 48 months at . They make the first 14 payments, but miss the next 3 payments. What new monthly payment over the remaining 31 months would repay the loan on schedule (i.e. 48 months from the original loan date)?

(3 Marks) A company needs to borrow $100,000 for 10 years. They decide to borrow the money via the sinking fund method. The lender will allow them to pay interest only on the loan once a year at an interest rate of 8% compounded annually. They must also set up a sinking fund to repay the principal in a lump sum at the end of 10 years. The payments into the sinking fund must be made annually and the rate of return for the sinking fund is 6% compounded annually. What is the periodic (annual) cost of the debt?

(1 Mark) A $10,000 face value bond redeemable at par is sold for $9,786. Is the coupon rate on this bond higher or lower than the current interest rate (the yield rate).

The coupon rate on this bond is lower than the current interest rate.

(3 Marks) A $1000 bond maturing at 106 in 20 years pays interest at 6% compounded semiannually. Find the purchase price today to guarantee an investor a yield of 9% compounded semiannually.