Problem 13-09 A bond has the following features: Coupon rate of interest (paid annually): 10 percent Principal: $1,000 Term to maturity: 9 years a. What will the holder receive when the bond matures? -Select- b. If the current rate of interest on comparable debt is 7 percent, what should be the price of this bond? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ Would you expect the firm to call this bond? Why? -Select- v , since the bond is selling for a -Select- c. If the bond has a sinking fund that requires the firm to set aside annually with a trustee sufficient funds to retire the entire issue at maturity, how much must the firm remit each year for nine years if the funds earn 7 percent annually and there is $110 million outstanding? Use Appendix C to answer the question. Round your answer to the nearest dollar. Interest Factors for the Present Value of an Annuity of One Dollar 6% 14% Time Period (e.g. year) 1 2 3 4 5 1% 2% 3% 4% 5% 7% 8% 9% 10% 12% 16% 18% 20% 24% 28% 32% 36% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.862 0.847 0.833 0.806 0.781 0.758 0.735 1.970 1.942 1.913 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.690 1.647 1.605 1.566 1.528 1.457 1.392 1.332 1.276 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.402 2.322 2.246 2.174 2.106 1.981 1.868 1.766 1674 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.037 2.914 2.798 2.690 2.589 2.404 2.241 2.096 1.966 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.274 3.127 2.991 2.745 2.532 2.345 2.181 6 7 8 9 10 5.795 5.601 5.417 5.242 5.076 4.917 4.766 4.623 4.486 4.355 4.111 3.889 3.685 3.498 3.326 3.020 2.759 2.534 2.399 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4.039 3.812 3.605 3.242 2.937 2.678 2.455 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4.344 4.078 3.837 3.421 3.076 2.786 2.540 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.985 5.759 5.328 4.946 4.607 4.303 4.031 3.566 3.184 2.868 2.603 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.650 5.216 4.833 4.494 4.193 3.682 3.269 2.930 2.650 11 12 13 14 15 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.988 5.453 5.029 4.656 4.327 3.776 3.335 2.978 2.683 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 5.197 4.793 4.439 3.851 3.387 3.013 2.708 12.134 11.348 10.635 9.986 9.394 8.534 8.358 7.904 7.487 7.103 6.424 5.842 5.342 4.910 4.533 3.912 3.427 3.040 2.727 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 5.468 5.008 4.611 3.962 3.459 3.061 2.740 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.060 7.606 6.811 6.142 5.575 5.092 4.675 4.001 3.483 3.076 2.750 16 17 18 19 20 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.312 7.824 6.974 6.265 5.669 5.162 4.730 4.003 3.503 3.088 2.758 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.002 7.120 6.373 5.749 5.222 4.775 4.059 3.518 3.097 2.763 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.2017.250 6.467 5.818 5.273 4.812 4.080 3.529 3.104 2.767 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 5.877 5.316 4.844 4.097 3.539 3.109 2.770 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.128 8.514 7.469 6.623 5.929 5.353 4.870 4.110 3.546 3.113 2.772 25 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 7.843 6.873 6.097 5.467 4.948 4.147 3.564 3.122 2.776 30 25.808 22.937 19.600 17.292 15.373 13.765 12.409 11.258 10.274 9.427 8.055 7.003 6.177 5.517 4.979 4.160 3.569 3.124 2.778 Interest Factors for the Present Value of One Dollar Nm 1% 990 980 971 961 951 2% 980 1961 942 924 906 3% 971 943 915 889 .863 49 962 925 889 855 822 5% 1952 907 .864 .823 784 6% 943 .890 .840 792 .747 7% 935 873 .816 763 713 8% 926 .857 .794 735 .681 9% 10% 917 900 842 .826 772 .751 708 682 650 .621 12% .893 .797 .712 .636 567 14% 877 .769 .675 592 519 15% 870 756 .658 572 497 16% 862 .743 .641 552 476 18% 20% 24% 847 832 806 718 694 650 .609 579 524 516 482 423 437 402 341 28% .781 610 477 .373 291 000 942 933 923 914 905 .888 .871 853 .837 .820 .838 813 .789 .766 .744 790 760 731 .703 .676 746 711 677 .645 .614 .705 665 .627 592 558 .666 623 582 .544 508 .630 583 540 .500 463 596 564 547 513 502 460 422 386 456 400 351 308 270 432 376 327 .284 247 370 314 266 .226 .191 335 279 .233 .194 162 .275 222 .179 .144 116 .227 178 .139 .108 085 11 12 13 .896 .887 879 .870 .861 .804 788 773 758 .743 722 701 681 .661 .642 .650 625 601 577 555 .585 557 530 505 .481 527 497 469 .442 .417 475 444 415 388 362 429 397 368 340 315 388 356 .326 350 319 290 263 .239 287 257 .229 .205 .183 237 .208 182 160 .140 .215 187 163 .141 123 .195 168 145 .125 .108 162 137 116 099 .084 135 112 093 .078 .065 .094 076 061 049 .040 .066 .052 040 .032 .025 .853 728 .844 714 .836 .700 828 .686 .820 .673 .623 .605 .587 570 554 534 513 494 475 456 .394 .371 350 331 .312 339 317 .296 276 .258 .292 .270 .250 .232 215 .218 .198 180 164 149 .163 .146 .130 116 .104 123 108 095 083 .073 .107 .093 .081 070 ,061 093 .080 .069 .060 051 071 060 051 .043 .037 ,054 045 .038 1031 026 .032 .026 .021 017 .014 .019 2015 .012 2009 007 377 194 178 .780 .610 478 375 .295 .233 .184 -146 .116 .092 .059 .038 .030 2024 .016 .010 .005 002 .742 552 412 308 .231 .174 .131 099 075 .057 .033 .020 .015 012 007 .004 .002 2001 Interest Factors for the Future Value of an Annuity of One Dollar 5% 8% 10% 20% Time Period (e.g. year) 1 2 3 4 5 1% 1.000 2.010 3.030 4.060 5.101 2% 1.000 2.020 3.060 4.122 5.204 3% 1.000 2.030 3.091 4.184 5.309 4% 1.000 2.040 3.122 4.246 5.416 1.000 2.050 3.152 4.310 5.526 6% 1.000 2.060 3.184 4.375 5.637 7% 1.000 2.070 3.215 4.440 5.751 1.000 2.080 3.246 4.506 5.867 9% 1.000 2.090 3.278 4.573 5.985 1.000 2.100 3.310 4.641 6.105 12% 1.000 2.120 3.374 4.770 6.353 14% 1.000 2.140 3.440 4.921 6.610 16% 1.000 2.160 3.506 5.067 6.877 1.000 2.200 3.640 5.368 7.442 000 6.152 7.214 8.286 9.369 10.462 6.308 7.434 8.583 9.755 10.950 6,468 7.662 8.892 10.159 11.464 6.633 7.898 9.214 10.583 12.006 6.802 8.142 9.549 11.027 12.578 6.975 8.394 9.897 11.491 13.181 7.153 8.654 10.260 11.978 13.816 7.336 8.923 10.637 12.488 14.487 7.523 9.200 11.028 13.021 15.193 7.716 9.487 11.436 13.579 15.937 8.115 10.089 12.300 14.776 17.549 8.536 10.730 13.233 16.085 19.337 8.978 11.413 14.240 17.518 21.321 9.930 12.915 16.499 20.798 25.958 10 11 12 13 14 15 11.567 12.683 13.809 14.947 16.097 12.169 13.412 14.680 15.974 17.293 12.808 14.192 15.618 17.086 18.599 13.486 14.207 15.026 15.917 16.627 17.713 18.292 19.599 20.024 21.579 14.972 16.870 18.882 21.051 23.276 15.784 17.888 20.141 22.550 25.129 16.645 18.977 21.495 24.215 27.152 17.560 20.141 22.953 26.019 29.361 18.531 21.384 24.523 27.975 31.772 20.655 24.138 28.029 32.393 37.280 23.044 27.271 32.089 37.581 43.842 25.732 30.850 36.786 43.672 51.659 32.150 39.580 48.496 59.195 72.035 16 17 18 19 20 17.258 18.430 19.615 20.811 22.019 18.639 20.012 21.412 22.841 24.297 20.157 21.762 23.414 25.117 26.870 21.825 23.698 25.645 27.671 29.778 23.657 25.840 28.132 30.539 33.066 25.673 28.213 30.906 33.760 36.786 27.888 30.840 33.999 37.379 40.995 30.324 33.750 37.450 41.446 45.762 33.003 36.974 41.301 46.018 51.160 35.950 40.545 45.599 51.159 57.275 42.753 48.884 55.750 63.440 72.052 50.980 59.118 68.934 78.969 91.025 60.925 87.442 71.673 105.93 84.140 128.11 98.603 154.74 115.370 186.68 25 28.243 32.030 36.459 41.646 47.727 54.865 63.249 73.106 84.701 98.347 133.33 181.87 249.210 471.98 30 34.785 40.568 47.575 56.085 66.439 79.058 94.461 113.283 136.308 164.494 241.333 356.878 530.310 1181.8