Cox Media Corporation pays an 11 percent coupon rate on debentures that are due in 25 years. The current yield to maturity on bonds of similar risk is 12 percent. The bonds are currently callable at $900. The theoretical value of the bonds will be equal to the present value of the expected cash flow from the bonds. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.

a. Find the market value of the bonds using semiannual analysis. (Ignore the call price in your answer. Do not round intermediate calculations and round your answer to 2 decimal places.)

Price of bond?

b. Do you think the bonds will sell for the price you arrived at in part a?

Yes

or

no

Appendix Present value of $1. PVE PV=FV1x Period 4% 0.962 0.925 0.889 0.855 10% 0.909 0.826 11% 0.901 0.812 0 0.751 0.731 0.659 0.683 0.822 0.713 0.621 0.593 0535 0.790 0.760 0.731 0.703 0.676 0.650 1% 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.861 0.853 0.844 0.836 0.828 0.820 0.780 0.742 0.672 0.608 2% 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.750 0.743 0.728 0.714 0.700 0.686 0.673 0.610 0.552 0.453 0.372 3% 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.799 0.766 0744 0.722 0.701 0681 0.661 0.642 0.623 0.605 0.597 0.570 0554 0.478 0.412 0.307 0.228 Percent 5% 6% 7% 0.952 0 .943 0.935 0.907 0.890 0.873 ORGA 0.864 0.840 0.816 0.823 0.792 0.763 0.784 0.747 0.746 0705 0.566 0.7110.665 0.623 0.677 0.627 0.582 0.645 0.592 0.544 0.614 0.558 0.508 0.585 0527 0.475 0.557 0.497 0.444 0.530 0.469 0.415 0.505 0.442 0.388 0.481 0.417 0.362 0.458 0.394 0.339 0.436 0.371 0.317 0.416 0.250 0.296 0.396 0.331 0.277 0.377 0312 0.258 0.295 0233 0.231 0.174 0.142 0 .097 0.067 0.087 0.054 0.034 8% 0.926 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.500 0.463 0.429 0.397 0.368 0.340 0.315 0.292 0.270 0.250 0232 0.215 0.146 0.099 0.046 0.021 9% 0.917 .842 0.772 0.709 0.650 0596 0.547 0.502 0.460 0.422 0388 0.356 0.326 0.299 0.275 0.252 0.231 0.212 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.239 0218 0.198 0.180 0.164 0.149 0.092 0.057 0.022 0.009 0.601 0.577 0.555 0.534 0.513 0.494 0.475 12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.205 0183 0.163 0.146 0.130 0.116 104 0.059 0.033 0.011 0.003 0.482 0.434 0.391 0.352 0.317 0.286 0.258 0.232 0.209 0.1BB 0.170 0.153 0.138 0.124 0.074 0.044 0.015 .005 0.194 0456 0.375 0.184 0.131 0.308 0.208 0.141 0.178 0.116 0.116 0.075 0.032 0.013 0 Appendix D Present value of an annuity of $1. PVA Percent 0 0 0.990 1.942 2894 3.808 4.713 0.971 1.913 2.829 3.717 4.580 0.935 1.800 2.624 3.387 4.100 4 767 5.389 5.971 926 1.783 2.577 3.312 3.993 5601 5.417 4.623 6.472 7325 6.515 7,024 0.990 1.970 2941 3.902 4.853 5.795 6.728 7652 8566 9.471 10.368 11.255 12.134 13.004 13.865 14 718 15.562 16.398 17.226 18.046 22.023 25.908 32.835 39.196 7.499 0.962 1.886 2.775 3.630 4.452 5.242 6.002 6.733 7.435 8.111 8.760 9.395 9.986 10.563 11.118 11.652 12.166 12,659 1 3.134 13.590 15.622 17.292 1 9.793 21.482 5.206 5.747 6.247 6.710 7.139 7.536 7.904 9.244 8.983 9.787 10.575 11.348 12.106 12.849 13.578 14.292 14.992 15.678 16.351 1635 19.523 22.396 27.355 31.424 0.952 1.859 2.723 3.546 4.329 5.076 5.786 6.463 7.108 7.722 8.306 8.963 9.394 9.999 10.380 10.838 11.274 11.690 12085 12.462 14.094 15.372 17.159 18.256 6.230 7020 7.786 8.530 9.253 9.954 10.635 11.296 11.938 12.561 13.166 13.754 14.324 14.877 17.413 19.600 23.115 25.730 .943 1.833 2.673 3.465 4.212 4.917 5582 6.210 6.802 7.360 7.887 8.384 8.853 9.295 9.712 10.106 10.477 10.82B 11.158 11.470 12.783 13.765 15.046 15.762 .559 0.917 0.909 0.901 0.893 1.759 1.736 1.713 1.690 2.531 2.487 2.444 2.402 3.240 3.170 3.102 3.037 3.890 3.791 3.696 3.605 4.486 4.355 4.231 4.111 5.033 4.868 4.712 4.564 5.535 5.335 5.146 4.968 5.995 5.759 5.537 5.328 6.418 6.145 5.889 5.650 6.805 6.495 6.207 5.938 7.1616 .8 14 6492 6.194 7.487 7.103 6.750 6.424 7.786 7.367 6992 6.628 8.061 7.606 7191 6.811 8.313 7.824 73796.974 8.544 8.022 7.5497.120 8.756 8.2017 .702 7.250 8.950 8.365 7.8397.366 9.129 8.514 7.963 7.469 9.8239.077 8.422 7.843 10.274 9.427 8.694 8.055 10.757 9.779 951 8.244 10.962 9.915 9.042 8.304 8.951 9.122 7.943 8.358 9.745 9. 108 9.447 .763 10.059 10.336 10.594 11.654 12.409 13.332 13.801 9 9.604 9.818 10.675 11.259 11.925 12 233