5. Bond valuation. Ponzi Corporation issued 14-year bonds two years ago at a coupon rate of 4. percent. The bonds make quarterly payments and the par value of bonds is 10 000. If the YTM (yield to maturity) on these bonds is 6 percent, what is the current bond price? 6. Annuity. You are going to borrow money from the bank. But when considering your income, you could afford to spend maximum 5 000 euros per year as total repayments. Now, if the loan interest rate is 4%, what would be the maximum loan amount which you can borrow from the bank if the loan has duration of 8 years and the annual loan payments are calculated on the basis of annuity? Find also, what is the second year loan principal and interest payments? 7. Refinancing decision. Two years ago Peter borrowed from a bank 40 000 euros for 6 years. The interest rate for the bank loan was 8% and the repayment schedule is based on monthly annuity payments. Now, after two years have passed, the interest rates have declined and his economic situation has improved (e.g. interest margin declined). Peter now has an opportunity to refinance the remaining loan balance with a 4% interest rate. However, there is a catch. The fee for refinancing is 600 euros. Questions: a) Find the initial monthly loan payment b) Find the loan balance after two years c) Now find the new monthly payment if loan is refinanced d) Should Peter refinance? (Hint: Compare the refinancing fee with present value of savings)