Petro Gas issued bonds five years ago at RM1,000.00 per bond. When issued, these bonds had...

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Petro Gas issued bonds five years ago at RM1,000.00 per bond. When issued, these bonds had a 25-year life, and the annual interest payment was 8 percent. This return was in line with the required returns by bondholders at that point in time, as described below: Real rate of return Inflation premium Risk premium Total return Rate (%) 233 8 Assume that 10 years later, due to bad publicity, the risk premium is now 6 percent and is appropriately reflected in the bonds' required return (or yield to maturity). The bonds have 15 years remaining until maturity. REQUIRED: Compute the new price of the bond. [4 marks] Petro Gas issued bonds five years ago at RM1,000.00 per bond. When issued, these bonds had a 25-year life, and the annual interest payment was 8 percent. This return was in line with the required returns by bondholders at that point in time, as described below: Real rate of return Inflation premium Risk premium Total return Rate (%) 233 8 Assume that 10 years later, due to bad publicity, the risk premium is now 6 percent and is appropriately reflected in the bonds' required return (or yield to maturity). The bonds have 15 years remaining until maturity. REQUIRED: Compute the new price of the bond. [4 marks]