Edison owns two corporate bonds. The ABC Inc. Corporate bond is a $50,000 15-year corporate bond that pays a 7% coupon. He has held the coupon for two (2) years. The XYZ Ltd. Corporate bond is a $25,000 10-year corporate bond that pays a 5% coupon. He has held the coupon for four (4) years. Both bonds are now trading for a 6% coupon. He has come to you for advice on if he should hold or sell the bonds. Please answer the following questions. (11 points)

What would be the sale value of the ABC Inc. bond if he were to sell today at a premium? (2 points)

What would be the sale value of the XYZ Ltd. bond if he were to sell today at a discount? (2 points)

How much earnings will he generate from each bond if he sells both bonds today (before tax)? If Edison is wanting to sell his bonds only if he makes a profit, which of the bonds should he sell (before tax)? (7 points)