Nominal Interest (coupon) Rate Liability Amount (S) Years to Ma Selected Liabilities of the firm Simple Loans Fixed-Payment Loans Long-term Bonds #1 Long-term Bonds #2 Liabilities Total Market Price for Bond #1 Market Price for Bond #2 Face Value of Each Bond 800 5,000 500,000 1,080,000 1,585,800 930.50 859.50 5% 12% 1096 1096 19 4 10 1,000.00 Selected Current Assets of the firm Marketable Securities Treasury Bills 100,000 Note: Treasury Bills have a S 10,000 face value, which matures in one year. Each Treasury Bill has a cost of $ 9,580.00 1. 2. 3. 4. How much interest would the firm pay each year on the simple-interest loan? How much would you write a check for to pay off the loan in one year? What is the monthly payment needed to pay off the fixed-payment loans? What is the current yield for each bond if the current price is: a. b. $930.50 for Bond #1? $859.50 for Bond #2? 5. What is the expected yield to maturity for each bond? a. b. Bond #1 selling for $930.50? Bond #2 selling for $859.50 6. What is the rate of capital gain if both bonds sell for $900.00 in one year? a. b. Bond #1 selling for $930.50 today? Bond #2 selling for $859.50 today? 7. If the Yield to Maturity expected by investors changes to 11%; what will be the market price of Bond #1? what will be the market price of Bond #2? what will be the dollar change in price for Bond #1? what will be the dollar change in price for Bond #2? a. b, d