b

d

c

A bond has the following features: - Coupon rate of interest (paid annually): 11 percent - Principal: $1,000 - Term to maturity: 8 years a. What will the holder receive when the bond matures? b. If the current rate of interest on comparable debt is 8 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? , since the bond is selling for a 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 eight years if the funds earn 8 percent annually and there is $120 million outstanding? Use Appendix C to answer the question. Round your answer to the nearest dollar. \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline \begin{tabular}{l} Time \\ Period \\ (eg. \\ year) \end{tabular} & 1% & 2% & 3% & 4% & 5% & 6% & 7% & 8% & 9% & 10% & 12% & 14% & 15% & & & 20% & 24% & \\ \hline \begin{tabular}{l} 1 \\ 2 \\ 3 \\ 4 \\ 5 \end{tabular} & \begin{tabular}{l} 990 \\ 980 \\ 971 \\ 961 \\ .951 \end{tabular} & \begin{tabular}{l} 980 \\ 961 \\ 942 \\ .924 \\ 906 \end{tabular} & \begin{tabular}{l} 971 \\ .943 \\ 915 \\ .889 \\ .863 \end{tabular} & \begin{tabular}{l} 962 \\ 925 \\ .889 \\ .855 \\ 822 \end{tabular} & \begin{tabular}{l} 952 \\ 907 \\ .864 \\ 823 \\ .784 \end{tabular} & \begin{tabular}{l} .943 \\ .890 \\ .840 \\ .792 \\ .747 \end{tabular} & \begin{tabular}{l} 935 \\ .873 \\ 816 \\ .763 \\ .713 \end{tabular} & \begin{tabular}{l} .926 \\ .857 \\ .794 \\ .735 \\ .681 \end{tabular} & \begin{tabular}{l} 917 \\ .842 \\ .772 \\ .708 \\ .650 \end{tabular} & \begin{tabular}{l} .909 \\ .826 \\ .751 \\ .683 \\ .621 \end{tabular} & \begin{tabular}{l} .893 \\ .797 \\ .712 \\ .636 \\ .567 \end{tabular} & \begin{tabular}{l} .877 \\ .769 \\ .675 \\ .592 \\ .519 \end{tabular} & \begin{tabular}{l} .870 \\ .756 \\ .658 \\ .572 \\ .497 \end{tabular} & \begin{tabular}{l} .862 \\ .743 \\ .641 \\ .552 \\ .476 \end{tabular} & \begin{tabular}{l} .847 \\ .718 \\ 609 \\ .516 \\ .437 \end{tabular} & \begin{tabular}{l} .833 \\ .694 \\ .579 \\ .482 \\ .402 \end{tabular} & \begin{tabular}{l} .806 \\ .650 \\ 524 \\ .423 \\ .341 \end{tabular} & \begin{tabular}{l} .781 \\ .610 \\ .477 \\ .373 \\ .291 \end{tabular} \\ \hline \begin{tabular}{c} 6 \\ 7 \\ 8 \\ 9 \\ 10 \end{tabular} & \begin{tabular}{l} 942 \\ 933 \\ 923 \\ 914 \\ 905 \end{tabular} & \begin{tabular}{l} 888 \\ .871 \\ 853 \\ .837 \\ 820 \end{tabular} & \begin{tabular}{l} .838 \\ .813 \\ .789 \\ .766 \\ .744 \end{tabular} & \begin{tabular}{l} .790 \\ .760 \\ .731 \\ .703 \\ .676 \end{tabular} & \begin{tabular}{l} .746 \\ .711 \\ .677 \\ .645 \\ .614 \end{tabular} & \begin{tabular}{l} .705 \\ .665 \\ .627 \\ .592 \\ .558 \end{tabular} & \begin{tabular}{l} .666 \\ .623 \\ 582 \\ .544 \\ .508 \end{tabular} & \begin{tabular}{l} .500 \\ .463 \end{tabular} & \begin{tabular}{l} .460 \\ .422 \end{tabular} & \begin{tabular}{l} .564 \\ .513 \\ .467 \\ .424 \\ .386 \end{tabular} & \begin{tabular}{l} .507 \\ 452 \\ 404 \\ .361 \\ .322 \end{tabular} & \begin{tabular}{l} .351 \\ .308 \\ .270 \end{tabular} & \begin{tabular}{l} .432 \\ .376 \\ .327 \\ .284 \\ .247 \end{tabular} & \begin{tabular}{l} .305 \\ .263 \\ .227 \end{tabular} & \begin{tabular}{l} 370 \\ 314 \\ 266 \\ .226 \\ .191 \end{tabular} & \begin{tabular}{l} .335 \\ .279 \\ .233 \\ .194 \\ .162 \end{tabular} & \begin{tabular}{l} .275 \\ .222 \\ .179 \\ .144 \\ .116 \end{tabular} & \begin{tabular}{l} .227 \\ .178 \\ .139 \\ .108 \\ .085 \end{tabular} \\ \hline \begin{tabular}{l} 14 \\ 15 \end{tabular} & \begin{tabular}{l} .896 \\ .887 \\ .879 \\ .870 \\ .861 \end{tabular} & \begin{tabular}{l} .804 \\ .788 \\ .773 \\ .758 \\ .743 \end{tabular} & \begin{tabular}{l} .722 \\ .701 \\ .681 \\ .661 \\ .642 \end{tabular} & \begin{tabular}{l} .650 \\ .625 \\ .601 \\ .577 \\ .555 \end{tabular} & \begin{tabular}{l} 585 \\ 557 \\ 530 \\ 505 \\ .481 \end{tabular} & \begin{tabular}{l} .527 \\ .497 \\ 469 \\ .442 \\ .417 \end{tabular} & \begin{tabular}{l} .475 \\ 444 \\ 95 \\ .388 \\ 362 \end{tabular} & \begin{tabular}{l} .429 \\ .397 \\ .368 \\ 340 \\ 315 \end{tabular} & \begin{tabular}{l} .356 \\ .326 \\ .299 \\ .275 \end{tabular} & \begin{tabular}{l} .350 \\ .319 \\ .290 \\ .263 \\ .239 \end{tabular} & \begin{tabular}{l} .287 \\ .257 \\ .229 \\ .205 \\ .183 \end{tabular} & \begin{tabular}{l} .237 \\ .208 \\ .182 \\ .160 \\ .140 \end{tabular} & \begin{tabular}{l} .215 \\ .187 \\ .163 \\ .141 \\ .123 \end{tabular} & \begin{tabular}{l} .195 \\ .168 \\ .145 \\ .125 \\ .108 \end{tabular} & \begin{tabular}{l} .137 \\ .116 \\ .099 \\ .084 \end{tabular} & \begin{tabular}{l} .135 \\ .112 \\ .093 \\ .078 \\ .065 \end{tabular} & \begin{tabular}{l} .094 \\ .076 \\ .061 \\ .049 \\ .040 \end{tabular} & \begin{tabular}{l} .066 \\ .052 \\ .040 \\ .032 \\ .025 \end{tabular} \\ \hline \begin{tabular}{l} 16 \\ 17 \\ 18 \\ 19 \\ 20 \end{tabular} & \begin{tabular}{l} 853 \\ .844 \\ 836 \\ 828 \\ .820 \end{tabular} & \begin{tabular}{l} 728 \\ .714 \\ .700 \\ .686 \\ .673 \end{tabular} & \begin{tabular}{l} .623 \\ .605 \\ .587 \\ .570 \\ .554 \end{tabular} & \begin{tabular}{l} .534 \\ 513 \\ .494 \\ .475 \\ .456 \end{tabular} & \begin{tabular}{l} .458 \\ .436 \\ .416 \\ .396 \\ 377 \end{tabular} & \begin{tabular}{l} .394 \\ .371 \\ .350 \\ .331 \\ .312 \end{tabular} & \begin{tabular}{l} 339 \\ .317 \\ 296 \\ 276 \\ 258 \end{tabular} & \begin{tabular}{l} 292 \\ 270 \\ .250 \\ .232 \\ .215 \end{tabular} & \begin{tabular}{l} .252 \\ .231 \\ .212 \\ .194 \\ .178 \end{tabular} & \begin{tabular}{l} .218 \\ .198 \\ .180 \\ .164 \\ .149 \end{tabular} & \begin{tabular}{l} .163 \\ .146 \\ .130 \\ .116 \\ .104 \end{tabular} & \begin{tabular}{l} .123 \\ .108 \\ .095 \\ .083 \\ .073 \end{tabular} & \begin{tabular}{l} .107 \\ .093 \\ .081 \\ .070 \\ .061 \end{tabular} & \begin{tabular}{l} .093 \\ .080 \\ .069 \\ .060 \\ .051 \end{tabular} & \begin{tabular}{l} .071 \\ .060 \\ .051 \\ .043 \\ .037 \end{tabular} & \begin{tabular}{l} .054 \\ .045 \\ .038 \\ .031 \\ .026 \end{tabular} & \begin{tabular}{l} .032 \\ .026 \\ .021 \\ .017 \\ .014 \end{tabular} & \begin{tabular}{l} .019 \\ .015 \\ .012 \\ .009 \\ .007 \end{tabular} \\ \hline 25 & 780 & .610 & .478 & 375 & 295 & 233 & .184 & .146 & .116 & 092 & .059 & .038 & .030 & .024 & .016 & .010 & .005 & .002 \\ \hline 30 & 742 & .552 & .412 & 308 & .231 & .174 & .13 & .099 & .075 & .057 & .033 & .020 & .015 & 012 & .007 & .004 & .002 & .001 \\ \hline \end{tabular} nterest Factors for the Future Value of an Annuity of One Dolla