a. A $1,000 bond has a 10.5 percent coupon and matures after eleven years. If current interest rates are 12 percent, what should be the price of the bond? Assume that the bond pays Interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar b. If after four years interest rates are still 12 percent, what should be the price of the bond? Use Appendix B and Appendix D to answer the question. Assume that the bond pays interest annually. Round your answer to the nearest dollar. C. Even though interest rates did not change in a and b, why did the price of the bond change? The price of the bond with the longer term is Select than the price of the bond with the shorter term as the investors will collect the Select interest payments and receive the principal within a longer period of time. d. Change the interest rate in a and b to 10 percent and rework your answers. Assume that the bond pays interest annually. Round your answers to the nearest dollar. Price of the bond (eleven years to maturity): $ Price of the bond (seven years to maturity): $ Even though the interest rate is 10 percent in both calculations, why are the bond prices different? The price of the bond with the longer term is Select than the price of the bond with the shorter term as the investors will collect the Select interest payments for a longer period of time. Interest Factors for the Present Value of One Dollar Time Period 28% el1- 04 15% 16% 18% 20% 2% 1 990 980 971962 952 943 935926 97 909 893 877870 862 847833 1980 961943 95 907890 873857842 826 97 69 76 43 718 694 650 1971942 915 889 864 840 816 94 751 72 675 1658 641609 59 | 524 4 96 924889 85582392_763 735708 683 1.636 592 1552 516 482 5 951906863 822784_747713.681 650 621 1.567 519 476 437 402 423 610 1477 373 291 596 554 507 25 | 222 6 942888 838 790 746705 666 630 7 933 871813 760 711665 .523 583 8 923 853 789 731677 627582 540 914817766 1703 545 592 544 500 10905 820744 1.676 1.614 558 508 463 1502 460 422 1.19 144 | 116 410 370 .335 354 314 29 | 305 1266 233 (263 1.226 | 194 | 162 162 135 1227 1178 139 1.108 085 23456789mmBBB bpB ww S % w w ww 137 112 2004 076 1066 1052 1040 (061 (0.49 COAD 1032 025 | 123 (054 032 1896 804 722 585 527 475 429 388 1997 1880 625 | 444 356 1879773.68] 1601 | 469 415 1.870 758 661 577505 42 388 340 299 | 263 205 15 B61743 542 555 AB1 17 362 35 275 39 183 16853 728 623 534 458 304 339 92 252 218 1.163 17844 714605 513436 31 37 270 231 198 | 146 | 108 1494 212 | 180 120 095 19828 475 276 232 194 | 164 116 20 820 673 554 | 37 312 258 215 178 | 149 1104 25 780 610 | 233 184 146 116 092 | 059 1038 030 2 0 12 30 231 174 137_09 0 06 033 020 0 1019 1015 225 | 456 007 0. Interest Factors for the Present Value of an Annuity of One Dollar Period le 1 2 3 4 5 1523456 9% 10% 12% 14% 16% 18% 20% 24% 28% 32% 36% 0.990 0.980 0.971 0.962 0.952 0943 0915 0.926 0917 0909 0.893 0.877 0.862 0.847 0.833 0.806 0.781 0.758 0.735 1.970 1.942 1.913 1.886 1859 1.822 1.80B 1.783 1.759 1.736 1.690 1.647 1.605 1.566 1.528 1.457 1 392 1.332 1.276 2.9412.884 2.829 2.775 2.723 2673 2624 2577 2531 2.487 2.402 2322 2.246 2.174 2.106 1.981 1.868 1.766 1.674 3.902 3.80B 3.717 3.630 3.546 3.465 3.387 3312 3.240 3170 3037 2014 2.798 W690 2.589 2.404 2.241 2.096 1966 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.274 3.127 2.991 2.745 2.532 2.345 2.181 6 7 8 5.795 5.601 5.417 5.242 5076 4917 4.766 4623 4.486 4.355 4.111 3.889 3.685 3.498 3.326 3.020 2.759 2.534 2.399 6.728 6.472 6.230 6.0025.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4.039 3.812 3.605 3.242 2.937 2.678 2.455 7.652 7.325 7020 6.733 6.463 6.210 5971 5.747 5.5355.335 4.968 46394 344 4.078 3.837 3.421 3076 2.786 2540 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.985 5.759 5.328 4.946 4,607 4.303 4.031 3.566 3.184 2.868 2.603 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.650 5.216 4.833 4.494 4.193 3.682 3.269 2.930 2.650 9 10 11 12 13 14 15 10.368 9.787 9253 8.760 8.306 7.887 7.499 7139 6.805 6.495 5988 5.453 5.029 4.656 4.327 3.776 3 335 2.978 2.683 11.255 10 575 9 954 9 385 8863 284 7943 7536 71616.814 6 19 5660 5 197 4.793 4.439 3 8513 387 3 012 2708 12 134 11 348 10 635 9969 1948.534 8 358 7.904 7487 7103 6.424 58425 342 4910 4.5333.912 3.427 3040 2727 13 004 12 106 11.296 10 567 98999295 8.745 8244 7.785 7367 5.628 6 0025 468 5008 4611 3962 3.459 2061 2.740 13.865 12.849 11.938 11.118 10.30 9.712 9.108 8.559 8.060 7.606 6.811 6.142 5 575 5.092 4.675 4.001 3.4833076 2.750 16 14.218 13 578 12 561 11.652 10 838 10.106 9.447 8.851 8312 7824 6.974 6.265 5.669 5.162 47304.002 3502 088 2758 17 15 562 14 292 12 166 12 166 11.274 10 477 9763 9.122 8.544 8.00271206 373 5.749 52224275 0597519 2097 2763 18 16 398 1499) 13 754 12 659 11 690 10 828 10 0509372 8.756 8 2017.250 6467 5 818 5 273 481240802509104 2767 1917226 15678 14 324 13 134 12085 11.158 10 316 9.604 8.950 8.365 73666550 5877 5 316 48444 0972579 109 2770 2018046 16 15 14 877 13 590 12 462 11.470 10 5049818 9.128 8.5147469662359295353487041103546113 2772 2019 17413 15 622 14.094 12.783 1654 10675 9.871 9011 18436.873 60925.462 404 4725642 0 3719600 17.202 15.3 13.765 12.400 11.258 102149477 055 7001 617 551709 41603514 0 Interest Factors for the Present Value of One Dollar Time Period 4 5 JOB WWW 5 . 9 % 0.2% 0% 1% 0% 1900 1 000 08001962 952 943 95 96 917909893 87/870862 84 833 B067 1 980 961943 925 907890 873 851842 826 97 769 56 43 18 694 650 3 971942 915 889 854 840 816 94 72 51 12 5 658 .64] 609 59 534 A 051924 BBQ B55823 2 63 35 .636 592 5 52 516 482 5 951906 86 822 74 747713 681 650 567 519497476 437402 347 6 947 888 838 790 746705 666 66 432 410 370 335 193388360 400 376 354 8 923 53 789 731677.67 582 51 327 105 0 91481) TESL) 01 0459254 500 361308 2844263 226 194 10905 820 744 676 614558 508 463 | 422 | 386 322 270 247 227 191 162 1 896 804 722 650 585 527 47 49 388 360 287 23 25 195 162 13094 066 12.887788 701_63555797 44 397 356 39 257 2008 187 168 17.112 06 052 13 .89 73 ER1601 530 469 415 368 1326 200 20182 163 145 116 099 .06] 040 1870 75B 66157) 505 442388 1340 299 263 205 160 141 125 099 078 15 .861.743642.555481.417362315 25 239 183 140 123 108 08.4 065 0440 .025 60 % w m12345 6789mmBB EH 1653 128623 34 58 39433092 23 218 16323 10/093070E4012-019 17844 14 605 513436 31 317 270 231 198 lab 108093080 D60,045 026 015 ( 836 700 587494 416 350 196 250 1.212 180 130 095 081069 051035 021 012 B2B 6053961776732 10 164 16083070 T60043031017 009 8203 5456 37 312 258 25 178 49 104 07 06/ 05/03/06014-01 780 610 478 | 702 552 412 375 295 233 184 146 116 308 231 174 131 099 075 092 059 038 030 024 2016 010 005 002 057 033 020 015 012 007 004 002 001 ww