a. Principal/all coupon payments b. Yes/No discount/premium
A bond has the following features: Coupon rate of interest (paid annually): 5 percent Principal: $1,000 Term to maturity: 11 years a. What will the holder receive when the bond matures? -Select- b. If the current rate of interest on comparable debt is 7 percent, what should be the price of this 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. $ Would you expect the firm to call this bond? Why? -Select-, since the bond is selling for a -Select- v. C. If the bond has a sinking fund that requires the firm to set aside annually with a trustee sufficient funds to retire the entire issue at maturity, how much must the firm remit each year for eleven years if the funds earn 7 percent annually and there is $80 million outstanding? Use Appendix C to answer the question. Round your answer to the nearest dollar. Interest Factors for the Present Value of One Dollar Time Period (e.g. year) 1 .862 NM 1% 2% 3% 4% 5% .990 980 971 962 952 980 1961 .943 925 907 971942 .889 864 961 924 .889 855 .823 951 906 863 822 .784 6% .943 .890 .840 .792 .747 7% 8% 9% 10% 12% 14% 15% 16% 935 926 917 .909 .893 .877 870 .873 .857 .842 826 .797 769 .756 .743 .816 .794 .772 .751 .712 .675 658 .641 .763 .735 .708 .683 636 592 .572 .552 713 681 650 621 567 519 497 .476 18% .847 .718 .609 1516 437 20% 24% .833 .806 .694 650 .579 .524 482 423 402 341 28% .781 -610 -477 .373 .291 .915 4 5 6 7 8 9 10 942 888 838 933 871 .813 .923 .853 .789 914 .837 .766 905 .820 .744 .790 .760 .731 .703 .676 .746 .711 .677 .645 .614 .705 .666 630 596 564 507 .665.623 583 547 513 452 .627 582 .540 .502 467 404 .592 .544 500 .460 424 .361 .558 .508 463 .422 .386 .322 456 432 400 376 .351 .327 .308 .284 .270 .247 410 .354 .305 .263 .227 1370 314 .266 .226 .191 .335 .279 .233 .194 .162 .275 .222 .179 .144 .116 .227 .178 .139 . 108 .085 .162 .137 11 12 13 14 15 .896 .887 879 .870 861 .804 .788 .773 .758 .743 .722 .650 .585 527 .701 .625 .557 497 .681 .601 530 .469 .661 577 505 442 .642 555 .481 417 475 429 444 .397 415 368 388 340 362 .315 .388 356 .326 .299 .275 350 .319 .290 .263 .239 .287 .257 .229 .205 .183 .237 -208 .182 .160 .140 .215 .187 .163 .141 .123 .195 .168 .145 .125 .108 .116 .135 .112 .093 .078 .065 .094 .076 .061 .049 .040 .066 052 .040 .032 .025 .099 .084 16 17 18 19 20 .853 .844 .836 .828 .820 .728 .714 .700 .686 .673 .623 .534 .605 .513 .587 494 .570 475 .554 456 458 436 416 396 377 .394 .371 .350 .331 .312 339 .317 .296 .276 .258 .292 .270 .250 .232 .215 .252 .231 .212 .194 .178 .218 .163 .123 .107 .093 .071 .198 .146 108 .093 .080 .060 .180 .130.095 .081 069 .051 .164 .116 .083.070 .060 .043 .149 .104 073 061 .051 .037 .054 .032 019 .045 026 015 .038 021 .012 .031 .017 .009 .026 .014 .007 25 .780 .610 .478 .375 .295 .233 .184 .146 .116 .092 .059 .038 .030 .024 .016 .010 .005 .002 30 .742 .552 412 308 .231 .174 .131 .099 .075 .057 .033 020 .015 .012 .007 .004 .002 _001 Interest Factors for the Present Value of an Annuity of One Dollar Time Period (e.g. year) 1 2 3 1% 8% NMetin 2% 3% 4% 5% 6% 7% 9% 10% 12% 14% 16% 18% 20% 24% 28% 32% 36% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 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 1.859 1.833 1.808 1.783 1.759 1.736 1.690 1.647 1.605 1.566 1.528 1.457 1.392 1.332 1.276 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.402 2.322 2.246 2.174 2.106 1.981 1.868 1.766 1.674 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.037 2.914 2.798 2.690 2.589 2.404 2.241 2.096 1.966 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 9 10 5.795 5.601 5.417 5.242 5.076 4.917 4.766 4.623 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 6.002 5.786 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 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4.344 4.078 3.837 3.421 3.076 2.786 2.540 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 11 12 13 14 15 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.988 5.453 5.029 4.656 4.327 3.776 3.335 2.978 2.683 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 5.197 4.793 4.439 3.851 3.387 3.013 2.708 12.134 11.348 10.635 9.986 9.394 8.534 8.358 7.904 7.487 7.103 6.424 5.842 5.342 4.910 4.533 3.912 3.427 3.040 2.727 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 5.468 5.008 4.611 3.962 3.459 3.061 2.740 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.060 7.606 6.811 6.142 5.575 5.092 4.675 4.001 3.483 3.076 2.750 16 17 18 19 20 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.312 7.824 6.974 6.265 5.669 5.162 4.730 4.003 3.503 3.088 2.758 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.002 7.120 6.373 5.749 5.222 4.775 4.059 3.518 3.097 2.763 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.2017.250 6.467 5.818 5.273 4.812 4.080 3.529 3.104 2.767 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 5.877 5.316 4.844 4.097 3.539 3.109 2.770 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.128 8.514 7.469 6.623 5.929 5.353 4.870 4.110 3.546 3.113 2.772 25 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 7.843 6.873 6.097 5.467 4.948 4.147 3.564 3.122 2.776 30 25.808 22.937 19.600 17.292 15.373 13.765 12.409 11.258 10.274 9.427 8.055 7.003 6.177 5.517 4.979 4.160 3.569 3.124 2.778 Interest Factors for the Future Value of an Annuity of One Dollar Time Period (e.g. year) 1 1% 7% NM 1.000 2.010 3.030 4.060 5.101 2% 1.000 2.020 3.060 4.122 5.204 3% 1.000 2.030 3.091 4.184 5.309 4% 1.000 2.040 3.122 4.246 5.416 5% 1.000 2.050 3.152 4.310 5.526 6% 1.000 2.060 3.184 4.375 5.637 1.000 2.070 3.215 4.440 5.751 8% 1.000 2.080 3.246 4.506 5.867 9% 1.000 2.090 3.278 4.573 5.985 10% 1.000 2.100 3.310 4.641 6.105 12% 1.000 2.120 3.374 4.770 6.353 14% 1.000 2.140 3.440 4.921 6.610 16% 1.000 2.160 3.506 5.067 6.877 20% 1.000 2.200 3.640 5.368 7.442 4 5 6 7 8 9 10 6.152 6.308 7.214 7.434 8.286 8.583 9.369 9.755 10.462 10.950 6.468 7.662 8.892 10.159 11.464 6.633 7.898 9.214 10.583 12.006 6.802 8.142 9.549 11.027 12.578 6.975 8.394 9.897 11.491 13.181 7.153 8.654 10.260 11.978 13.816 7.336 8.923 10.637 12.488 14.487 7.523 9.200 11.028 13.021 15.193 7.716 8.115 9.487 10.089 11.436 12.300 13.579 14.776 15.937 17.549 8.536 10.730 13.233 16.085 19.337 8.978 11.413 14.240 17.518 21.321 9.930 12.915 16.499 20.798 25.958 11 12 13 14 15 11.567 12.683 13.809 14.947 16.097 12.169 13.412 14.680 15.974 17.293 12.808 14.192 15.618 17.086 18.599 13.486 15.026 16.627 18.292 20.024 14.207 15.917 17.713 19.599 21.579 14.972 16.870 18.882 21.051 23.276 15.784 17.888 20.141 22.550 25.129 16.645 17.560 18.531 20.655 18.977 20.141 21.384 24.138 21.495 22.953 24.523 28.029 24.215 26.019 27.975 32.393 27.152 29.361 31.772 37.280 23.044 27.271 32.089 37.581 43.842 25.732 30.850 36.786 43.672 51.659 32.150 39.580 48.496 59.195 72.035 16 17 18 19 20 17.258 18.430 19.615 20.811 22.019 18.639 20.012 21.412 22.841 24.297 20.157 21.762 23.414 25.117 26.870 21.825 23.698 25.645 27.671 29.778 23.657 25.840 28.132 30.539 33.066 25.673 28.213 30.906 33.760 36.786 27.888 30.840 33.999 37.379 40.995 30.324 33.003 33.750 36.974 37.450 41.301 41.446 46.018 45.762 51.160 35.950 40.545 45.599 51.159 57.275 42.753 48.884 55.750 63.440 72.052 50.980 59.118 68.934 78.969 91.025 60.925 87.442 71.673 105.93 84.140 128.11 98.603 154.74 115.370 186.68 25 28.243 32.030 36.459 41.646 47.727 54.865 63.249 73.106 84.701 98.347 133.33 181.87 249.210 471.98 30 34.785 40.568 47.575 56.085 66.439 79.058 94.461 113.283 136.308 164.494 241.333 356.878 530.310 1181.8
