The current market price of a Jones' Company bond is $1,297.58. A 10% coupon interest rate is paid semi-annually, and the par value is equal to $1,000. What is the YTM (on an annual basis) if the bonds mature 10 years from today? A major auto manufacturer has experienced a market re-evaluation lately due to a number of lawsuits. The firm has a bond issue outstanding with 15 years to maturity and a coupon rate of 8% (paid semiannually). The required rate has now risen to 16%. At what price can these securities be purchased on the market? Ford and GM have similar bond issues outstanding. The Ford bond has interest payments of $80 paid annually and matures in the year 2002 (20 years from today). The GM bond has interest payments of $80 paid semiannually and also matures in the year 2002. If the required rate of return (kd) is 12%, what is the difference in current selling price of the two bonds? Recently, TLE, Inc., filed bankruptcy papers. The firm was reorganized as DL, Inc., and the court permitted a new indenture on an outstanding bond issue to be put into effect. The issue has 10 years to maturity and a coupon rate of 10%, paid annually. The new agreement allows the firm to pay no interest for 5 years and then at maturity to repay principal and any unpaid interest (no interest on the unpaid interest). If the required return is 20%, what should such bonds sell for in the market today? In order to assess accurately the capital structure of a firm, it is necessary to convert the balance sheet to a market value basis. The current balance sheet is as follows:

Long-term debt (bonds) $10,000,000 Preferred stock 2,000,000 Common stock ($10 par) 10,000,000 Retained earnings 4,000,000 ----------- Total debt and equity $26,000,000

The bonds mature in 10 years. Interest is payable semiannually and the yield to maturity is 12%. The coupon rate is 4 percent. What is the current market value of the firm's debt?