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eBook Problem 13-10 You are given the following information concerning a noncallable, sinking fund debenture: Principal: $1,000 Coupon rate of interest: 6 percent Term to
eBook Problem 13-10 You are given the following information concerning a noncallable, sinking fund debenture: Principal: $1,000 Coupon rate of interest: 6 percent Term to maturity: 12 years Sinking fund: 3 percent of outstanding bonds retired annually; the balance at maturity a. If you buy the bond today at its face amount and interest rates rise to 12 percent after five 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. $ b. If you hold the bond 12 years, what do you receive at maturity? -Select- c. What is the bond's current yield as of right now? Round your answer to the nearest whole number. % d. Given your price in a, what is the yield at maturity? Round your answer to the nearest whole number. % e. What proportion of the total debt issue is retired by the sinking fund? Round your answer to the nearest whole number. % f. If the final payment to retire this bond is $800,000, how much must the firm invest annually to accumulate this sum if the firm is able to earn 6 percent on the invested funds? Use Appendix C to answer the question. Round your answer to the nearest dollar. $
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