Mediterranean Hotel Investments PTY LTD, decides to issue 40-year bonds with a face value of $1000 and semiannual coupon payments. The effective annual yield on other bonds of similar risk and time to maturity is 6.5%, so the company decides to offer 7% annual coupon to attract investors. What would be a fair price for these bonds? Show all workings. Imagine that immediately after issue, the general level of interest rates in the economy moves to such an extent that the value of the Mediterranean Hotel Investments bond shifts to exactly $1000. What would now be the new bond-equivalent yield (the one that will be advertised in the financial press as an annual rate and is variously called Nominal Interest Rate, Quoted Interest Rate or sometimes just yield or interest rate)?