Case Study: You have been hired to analyze the debt securities of your organization. The firm has multiple outstanding loans and bonds. Both Long-term bonds make Semi-Annual payments. The rates that are provided are the Annual Percentage Rate for each debt instrument, also known as APR (or NOM). The Fixed-Payment loan requires Monthly payments. In order to get the Period Rate of a debt instruments, you need to divide it by the number of periods per year. More specifically, you must adjust the N, I/Y, and PMT buttons (values) from Annual Data to Period Length Data. A review of the balance sheet shows the following liabilities of the firm: Liability Amount Nominal Interest (Coupon) Rate Years to Maturity Market (Current) Value of 1 Individual Bond Face (Original) Value of 1 individual Bond Fixed Income Liabilities Simple-Interest Loan $800 5% Fixed-Payment Loan $5,000 12% Long term Bond #1 $500,000 10% $930.50 $1,000 Long term Bond #2 $1,080,000 10% $859.50 $1,000 Total Liablities $1,585,800 1. How much interest ($) would the firm pay each year on the annual simple-interest loan? 2. How much would you write a check for to pay off the entire simple loan in one year? 3. What is the monthly payment needed to pay off the fixed-payment loan? 4. What is the expected annual current yield for each bond if the current price is: a. $930.50 for Bond #1? b. $859.50 for Bond #2? 5. What is the expected annual yield to maturity for each bond? (Use TVM) a. Bond #1 selling for $930.50? b. Bond #2 selling for $859.50 6. What is the annual rate of capital gain if both bonds sell for $900.00 in one year? (Be sure to pay attention to if it is a gain or loss) a. Bond #1 selling for $930.50 today? b. Bond #2 selling for $859.50 today? 7. Assume Long-term Bond #2 has 5 years left of Call Protection and offers an extra year's worth of payments as a Call Premium. If you expect interest rates to decline to 7.5% in 5 years, what is your Yield-to-Call