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Problem $13-10$

You are given the following information concerning a noncallable, sinking fund debenture:

Principal: $$1,000$

Coupon rate of interest: $8$ percent

Term to maturity: $14$ years

Sinking fund: $3$ percent of outstanding bonds retired annually; the balance at maturity

If you buy the bond today at its face amount and interest rates rise to $14$ percent after three years have passed, what is your capital gain or loss? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Use a minus sign to enter the loss amount, if any, as a negative value. Round your answer to the nearest dollar.

$

If you hold the bond $14$ years, what do you receive at maturity?

What is the bond's current yield as of right now? Round your answer to the nearest whole number.

$\%$

Given your price in a$,$ what is the yield at maturity? Round your answer to the nearest whole number.

$\%$

What proportion of the total debt issue is retired by the sinking fund? Round your answer to the nearest whole number.

$\%$

If the final payment to retire this bond is $$900,000,$ how much must the firm invest annually to accumulate this sum if the firm is able to earn $8$ percent on the invested funds? Use Appendix C to answer the question. Round your answer to the nearest dollar.