The Lone Star Company has $1,000 par value bonds outstanding at 10 percent interest. The bonds will mature in 18 years. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Compute the current price of the bonds if the present yield to maturity is. (Do not round intermediate calculations. Round your final answers to 2 decimal places. Assume interest payments are annual.)

7%

8%

13%

The Lone Star Company has $1,000 par value bonds outstanding at 10 percent interest. The bonds will mature in 18 years. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Compute the current price of the bonds if the present yield to maturity is. (Do not round intermediate calculations. Round your final answers to 2 decimal places. Assume interest payments are annual.) Bond Price a. 7 percent b. 8 percent c. 13 percent $ 789.26 Appendix B Present value of $1, PVF 1 PV = FV |(1 + 7)" 1% 2% 3% 4% 5% 11% 12% Period 1 2 10% 0.909 0.990 0.980 0.971 0.962 0.925 0.889 0.855 0.952 0.907 0.864 0.823 8% 0.926 0.857 0.794 0.735 3 0.826 0.751 0.683 4 0.961 0.901 0.812 0.731 0.659 0.593 0.535 0.482 5 0.951 6 0.942 0.933 0.681 0.630 0.583 7 8 0.923 0.540 0.434 9 0.914 0.905 0.896 0.887 10 0.822 0.790 0.760 0.731 0.703 0.676 0.650 0.625 0.601 0.500 0.463 0.429 11 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.728 0.714 0.700 0.686 0.673 0.610 0.552 0.453 0.372 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 0.766 0.744 0.722 0.701 0.681 0.661 0.642 0.623 0.605 0.587 0.570 0.554 0.478 0.412 0.307 0.228 12 Percent 6% 7% 0.943 0.935 0.890 0.873 0.840 0.816 0.792 0.763 0.747 0.713 0.705 0.666 0.665 0.623 0.627 0.582 0.592 0.544 0.558 0.508 0.527 0.475 0.497 0.444 0.469 0.415 0.442 0.388 0.417 0.362 0.394 0.339 0.371 0.317 0.350 0.296 0.331 0.277 0.312 0.258 0.233 0.184 0.174 0.131 0.097 0.067 0.054 0.034 0.784 0.746 0.711 0.677 0.645 0.614 0.585 0.557 0.530 0.505 0.481 0.458 0.436 0.416 0.396 9% 0.917 0.842 0.772 0.708 0.650 0.596 0.547 0.502 0.460 0.422 0.388 0.356 0.326 0.299 0.275 0.252 0.231 0.212 0.194 0.178 0.116 0.075 0.032 0.013 13 0.879 0.870 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.205 0.183 0.163 0.146 0.130 0.116 0.104 0.059 0.033 0.011 0.003 14 0.621 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.239 0.218 0.198 0.180 0.164 0.149 0.092 0.057 0.022 0.009 15 16 0.861 0.853 0.844 0.391 0.352 0.317 0.286 0.258 0.232 0.209 0.188 0.170 0.153 0.138 0.124 0.074 0.044 0.015 0.005 0.397 0.368 0.340 0.315 0.292 0.270 0.250 0.232 0.215 0.146 0.099 0.046 0.021 17 18 0.577 0.555 0.534 0.513 0.494 0.475 0.456 0.375 0.308 0.208 0.141 0.836 0.828 19 20 0.820 25 0.780 30 0.742 0.377 0.295 0.231 0.142 0.087 40 50 0.672 0.608 Appendix B (concluded) Present value of $1 Percent 13% 14% 17% 50% Period 1 20% 0.833 35% 0.741 0.877 0.855 15% 0.870 0.756 0.658 16% 0.862 0.743 0.641 18% 0.847 0.718 0.609 19% 0.840 0.706 0.593 25% 0.800 0.640 0.512 30% 0.769 0.592 0.455 40% 0.714 0.510 0.364 2 0.694 0.549 0.769 0.675 0.731 0.624 3 0.579 0.406 4 0.534 0.592 0.519 0.572 0.497 0.515 0.437 0.499 0.419 0.482 0.402 0.410 0.328 0.350 0.269 0.301 0.223 0.260 0.186 5 0.456 0.885 0.783 0.693 0.613 0.543 0.480 0.425 0.376 0.333 0.295 0.552 0.476 0.410 0.354 6 0.456 0.400 0.351 0.432 0.376 0.390 0.333 0.370 0.314 0.352 0.296 0.335 0.279 7 0.262 0.210 0.168 8 0.285 0.249 9 0.327 0.284 0.247 0.207 0.159 0.123 0.094 0.073 0.305 0.263 0.227 0.308 0.270 0.243 0.233 0.194 0.162 0.209 0.176 10 0.134 0.107 0.086 0.069 0.208 0.178 0.667 0.444 0.296 0.198 0.132 0.088 0.059 0.039 0.026 0.017 0.012 0.008 0.005 0.003 0.002 0.002 0.001 0.001 11 0.056 0.261 0.231 0.237 0.208 0.195 0.168 0.148 0.124 12 0.152 0.135 0.112 0.093 0.078 13 0.204 0.181 0.182 0.160 0.104 0.088 0.055 0.044 0.043 0.033 0.025 14 0.165 0.122 0.091 0.067 0.050 0.037 0.027 0.020 0.015 0.011 0.008 0.006 0.005 0.003 0.002 0.001 15 0.133 0.095 0.068 0.048 0.035 0.025 0.018 0.013 0.009 0.006 0.005 0.003 0.002 0.002 0.001 0 0.074 0.020 0.015 16 0.160 0.141 0.125 0.111 0.266 0.225 0.191 0.162 0.137 0.116 0.099 0.084 0.071 0.060 0.051 0.043 0.037 0.016 0.007 0.001 0 0.215 0.187 0.163 0.141 0.123 0.107 0.093 0.081 0.070 0.061 0.030 0.015 0.004 0.001 17 0.140 0.123 0.108 0.095 0.083 0.073 0.038 0.145 0.125 0.108 0.093 0.080 0.069 0.060 0.051 0.024 0.012 0.003 0.001 18 0.130 0.111 0.095 0.081 0.069 0.059 0.051 0.043 0.020 0.009 0.002 0 0.062 0.052 0.044 0.037 0.031 0.013 0.098 19 0.065 0.054 0.045 0.038 0.031 0.026 0.010 0.004 0.001 0 0.035 0.028 0.023 0.018 0.014 0.012 0.004 0.001 0 o 0.012 0.009 0.007 0.005 0.001 20 0.087 25 0.047 0.026 0.008 30 0 0 0 0 0 0 0.020 0.005 0.005 0.001 0 0 0 40 50 0.002 0.001 0 Appendix D Present value of an annuity of $1, PV FA PVA = A 1- (1 + i)" Percent 6% 1% 2% 3% 4% 5% 8% 11% Period 1 2 0.971 0.980 1.942 7% 0.935 1.808 9% 0.917 1.759 10% 0.909 1.736 1.913 3 2.884 2.531 2.829 3.717 2.487 3.170 0.901 1.713 2.444 3.102 3.696 4.231 2.624 3.387 4.100 4.767 12% 0.893 1.690 2.402 3.037 3.605 4.111 4.564 4 5 3.791 4.355 6 7 4.868 8 4.968 5.328 9 5.335 5.759 6.145 6.495 10 11 5.650 5.938 12 13 0.990 1.970 2.941 3.902 4.853 5.795 6.728 7.652 8.566 9.471 10.368 11.255 12.134 13.004 13.865 14.718 15.562 16.398 17.226 18.046 22.023 25.808 32.835 39.196 3.808 4.713 5.601 6.472 7.325 8.162 8.983 9.787 10.575 11.348 12.106 12.849 13.578 14.292 14.992 15.678 16.351 19.523 22.396 27.355 31.424 0.962 1.886 2.775 3.630 4.452 5.242 6.002 6.733 7.435 8.111 8.760 9.385 9.986 10.563 11.118 11.652 12.166 12.659 13.134 13.590 15.622 17.292 19.793 21.482 4.580 5.417 6.230 7.020 7.786 8.530 9.253 9.954 10.635 11.296 11.938 12.561 13.166 13.754 14.324 14.877 17.413 19.600 23.115 25.730 0.952 1.859 2.723 3.546 4.329 5.076 5.786 6.463 7.108 7.722 8.306 8.863 9.394 9.899 10.380 10.838 11.274 11.690 12.085 12.462 14.094 15.372 17.159 18.256 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 7.360 7.887 8.384 8.853 9.295 9.712 10.106 10.477 10.828 11.158 11.470 12.783 13.765 15.046 15.762 0.926 1.783 2.577 3.312 3.993 4.623 5.206 5.747 6.247 6.710 7.139 7.536 7.904 8.244 8.559 8.851 9.122 9.372 9.604 9.818 10.675 11.258 11.925 12.233 14 3.240 3.890 4.486 5.033 5.535 5.995 6.418 6.805 7.161 7.487 7.786 8.061 8.313 8.544 8.756 8.950 9.129 9.823 10.274 10.757 10.962 5.389 5.971 6.515 7.024 7.499 7.943 8.358 8.745 9.108 9.447 9.763 10.059 10.336 10.594 11.654 12.409 13.332 13.801 6.194 6.424 6.628 6.811 4.712 5.146 5.537 5.889 6.207 6.492 6.750 6.982 7.191 7.379 7.549 7.702 7.839 7.963 15 16 6.814 7.103 7.367 7.606 7.824 8.022 8.201 8.365 8.514 9.077 9.427 9.779 9.915 17 18 19 20 6.974 7.120 7.250 7.366 7.469 7.843 8.055 8.244 8.304 25 30 8.422 8.694 8.951 9.042 40 50 Appendix D (concluded) Present value of an annuity of $1 Period 13% 14% 16% 25% 30% 1 15% 0.870 1.626 0.877 1.647 0.862 18% 0.847 1.566 0.800 1.440 2 3 17% 0.855 1.585 2.210 2.743 0.885 1.668 2.361 2.974 1.605 2.246 2.798 40% 0.714 1.224 1.589 1.849 2.322 50% 0.667 1.111 1.407 1.605 2.283 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 2.174 1.952 2.362 4 2.914 2.855 2.690 5 2.035 3.433 3.889 3.352 3.784 3.274 3.685 3.199 3.589 1.737 1.824 6 3.517 3.998 4.423 4.799 7 4.288 8 3.837 4.639 4.946 9 9 3.922 4.207 4.451 4.659 4.836 1.883 1.922 1.948 4.031 2.689 2.951 3.161 3.329 3.463 3.571 3.656 3.725 3.780 10 4.039 4.344 4.607 4.833 5.029 5.197 5.342 5.468 1.965 5.216 5.453 2.168 2.263 2.331 2.379 2.414 2.438 2.456 2.469 5.132 5.426 5.687 5.918 6.122 6.302 6.462 6.604 6.729 11 12 Percent 19% 0.840 1.547 2.140 2.639 3.058 3.410 3.706 3.954 4.163 4.339 4.486 4.611 4.715 4.802 4.876 4.938 4.988 5.033 5.070 5.101 5.195 5.235 5.258 5.262 4.192 4.327 4.439 4.533 5.660 4.988 5.118 0.769 1.361 1.816 2.166 2.436 2.643 2.802 2.925 3.019 3.092 3.147 3.190 3.223 3.249 3.268 3.283 3.295 3.304 3.311 3.316 3.329 3.332 3.333 3.333 13 35% 0.741 1.289 1.696 1.997 2.220 2.385 2.508 2.598 2.665 2.715 2.752 2.779 2.799 2.814 2.825 2.834 2.840 2.844 2.848 2.850 2.856 2.857 2.857 2.857 14 2.478 3.127 3.498 3.812 4.078 4.303 4.494 4.656 4.793 4.910 5.008 5.092 5.162 5.222 5.273 5.316 5.353 5.467 5.517 5.548 5.554 5.229 5.324 4.160 4.487 4.772 5.019 5.234 5.421 5.583 5.724 5.847 5.954 6.047 6.128 6.198 6.259 6.464 6.566 6.642 6.661 3.824 3.859 15 5.842 6.002 6.142 6.265 6.373 6.467 6.550 6.623 6.873 7.003 7.105 7.133 16 17 18 19 20 5.405 5.475 5.575 5.668 5.749 5.818 5.877 6.840 6.938 4.611 4.675 4.730 4.775 4.812 4.843 4.870 4.948 4.979 4.997 4.999 5.534 5.584 1.977 1.985 1.990 1.993 1.995 1.997 1.998 1.999 1.999 1.999 2.000 2.000 2.000 2.000 2.484 2.489 2.492 2.494 2.496 2.497 2.499 2.500 2.500 2.500 3.887 3.910 3.928 3.942 3.954 3.985 3.995 3.999 4.000 25 7.025 7.330 7.496 7.634 7.675 5.929 6.097 6.177 30 40 50 5.628 5.766 5.829 5.871 5.880 6.233 6.246