QUESTION 1

Part A: Ryngaert Inc. recently issued noncallable bonds that mature in 15 years. They have a par value of $1,000 and an annual coupon of 5.7%. If the current market interest rate is 7.0%, at what price should the bonds sell?

a. $1,040.28

b. $802.25

c. $1,013.84

d. $775.81

e. $881.60

Part B: Morin Company's bonds mature in 8 years, have a par value of $1,000, and make an annual coupon interest payment of $65. The market requires an interest rate of 6.1% on these bonds. What is the bond's price?

a. $1,024.74

b. $1,147.71

c. $1,116.97

d. $1,096.47

e. $1,280.93