It is now January 1, 2016, and you are considering the purchase of an outstanding bond that was issued on January 1, 2014. It has a 8.5% annual coupon and had a 30-year original maturity. (It matures on December 31, 2043.) There is 5 years of call protection (until December 31, 2018), after which time it can be called at 109-that is, at 109% of par, or $1,090. Interest rates have declined since it was issued, and it is now selling at 119.575% of par, or $1,195.75.

a. What is the yield to maturity? Round your answer to two decimal places.

What is the yield to call? Round your answer to two decimal places.

Your father is 50 years old and will retire in 10 years. He expects to live for 25 years after he retires, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as $40,000 has today. (The real value of his retirement income will decline annually after he retires.) His retirement income will begin the day he retires, 10 years from today, at which time he will receive 24 additional annual payments. Annual inflation is expected to be 3%. He currently has $230,000 saved, and he expects to earn 7% annually on his savings. How much must he save during each of the next 10 years (end-of-year deposits) to meet his retirement goal? Round your answer to the nearest cent.