Sinbad Co. Ltd. is a company specializing in the production of high-end yachts for the billionaires. In order to expand its business, Sinbad wants to raise further debt capital and is about to issue 300,000 20-year bonds with 5% annual coupons and a face value of $1,000 each. A similar issue already outstanding is a par-value bond that offers a 6% annual coupon with the same face value. One year later, the market yield for this new bond has dropped by 1 percentage point.

1. At what price should Sinbad sell its new bonds (at time 0)?

2. Compute the realized yield over this one year holding period.