Problem 16-9 Interest rates and bond ratings [LO 16-2] Twenty-five-year B-rated bonds of Parker Optical Company were initially issued at a 15 percent yield. After 24 years the bonds have been upgraded to Aa2. Such bonds are currently yielding 14 percent to maturity. Use Table 16-2. Determine the price of the bonds with 1 years remaining to maturity. Price of the bonds H 1 2 Table 16-2 Interest rates and bond prices (face value is $1,000 and annual coupon rate is 12%) B D F G Rate in the Market (%)Annual Yield to Maturity* Years to Maturity 8% 10% 12% 14% 16% 1 $1,037.72 $1,018.59 $1,000.00 $981.92 $964.33 4 15 $1,345.84 $1,153.72 $1,000.00 $875.91 $774.84 5 25 $1,429.64 $1,182.56 $1,000.00 $861.99 $755.33 =+PV(F2/2,45*2,- 120/2, -1000) 7 +PV(rate, nper,pmt, [fv]) 3 6