Louis Lindsey is a moderate investor who asked for your advice about two bonds to which his company is considering investing. One is a seasoned issue of the Star Accessory Company that was first sold 22 years ago at a face value of $1000, with a 25-year term paying 6%. The other is a new 30-year issue of the Landry Escalator Company that is coming out now at a face value of $1000. Interest rates are now 6%, so both bonds will pay the same coupon rate. address the following:

1. What is each bond worth today? Show your calculations and provide a analysis on your results.
2. If the interest rates were to rise to 12% today, estimate, without making any calculations, what each bond would be worth?
3. Calculate the prices in number 2, to verify your estimating ability. If interest rates are expected to rise, which bond is the better investment?
4. If interest rates are expected to fall, which bond is better? Are long term rates likely to fall much lower than 6%? Why or why not?

Submit calculation analysis in a memo to the investor