Suneview Ltd., a listed public company with actively traded securities, issued debentures with a total term of fifteen years and a face value of $1,000 to the public exactly five years ago for $1,000 each. The debentures were issued at an annual coupon interest rate of 12% p.a. with payments annually in arrears. Interest rates for debentures of a similar risk to those of Suneview Ltd. are currently (five years after originally being issued) being traded at a premium of 3% above the government bond rate. A new series of government bonds (Series XXIV) were issued today for a ten-year term at an annual coupon interest rate of 5% p.a. (with payments annually in arrears), a face / par value of $1,000 and a current yield to bondholders of 7% p.a.

Required:

a) Given the information provided above, how much would you pay today for Suneview Ltd. debentures? PLEASE EXPLAIN THE BASIS FOR THE CHANGE IN PRICE, from the original issue price of $1,000 using appropriate finance terminology / reasoning!!!