Context: You are the CFO of Company XYZ. To expand the companys operations, you enlisted an underwriter to help sell $50 million in new 20-year bonds to finance a growth project. You are considering whether to issue coupon bearing bonds or zero-coupon bonds. The YTM on either bond issue will be 7.5 percent. The coupon bond would have a 6.5 percent coupon rate. The companys tax rate is 35 percent. What are the companys considerations in issuing a coupon bond compared to a zero-coupon bond?

If the company had the options of issuing any of these three bonds:

1- Bond A with a 7% annual coupon, matures in 12 years, and a $1,000 face value.

2- Bond B with a 9% annual coupon, matures in 12 years, and a $1,000 face value.

3- Bond C with an 11% annual coupon, matures in 12 years, and a $1,000 face value.

Each bond has a yield to maturity of 9%. From an investors perspective answer the following questions.

a. indicate whether each bond is trading at a premium, at a discount, or at par.

b. Calculate the price of each of the three bonds.

c. Calculate the current yield for each of the three bonds.

d. If the yield to maturity for each bond remains at 9%, what will be the price of each bond 1 year from now?

e. What is the expected capital gains yield for each bond?

f. What is the expected total return for each bond?

*this is one question with multiple parts