Four years ago, your firm issued 1,000 par, 25-year bonds, with a 7 percent

coupon rate and a 10 percent call premium.

a. If these bonds are now called, what is the actual yield to call for the

investors who originally purchased them at par?

b. If the current interest rate on the bond is 5 percent and the bonds

were not callable, at what price would each bond sell?