One year ago Lerner and Luckmann Co. issued 15-year, noncallable, 6.4% annual coupon bonds at their par value of $1,000. Today, the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they now have 14 years to maturity?

Select the correct answer.

a. $1,086.31

b. $1,088.66

c. $1,091.01

d. $1,083.96

e. $1,081.61

Rogoff Co.'s 15-year bonds have an annual coupon rate of 9.5%. Each bond has face value of $1,000 and makes semiannual interest payments. If you require an 11% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?

Select the correct answer.

a. $886.18

b. $895.82

c. $891.00

d. $888.59

e. $893.41

CMS Corporation's balance sheet as of today is as follows:

Long-term debt (bonds, at par) $10,000,000

Preferred stock 2,000,000

Common stock ($10 par) 10,000,000

Retained earnings 4,000,000

Total debt and equity $26,000,000

The bonds have a 8.2% coupon rate, payable semiannually, and a par value of $1,000. They mature exactly 10 years from today. The yield to maturity is 12%, so the bonds now sell below par. What is the current market value of the firm's debt?

Select the correct answer.

a. $7,820,005

b. $7,819,295

c. $7,817,876

d. $7,818,586

e. $7,820,715