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The Vinny Cartier Company issued bonds at $1,000 per bond. The bonds had a 25 -year life when issued, with semiannual payments at the then
The Vinny Cartier Company issued bonds at $1,000 per bond. The bonds had a 25 -year life when issued, with semiannual payments at the then annual rate of 15 percent. This return was in line with required returns by bondholders at that point, as described below: issume that ten years later the inflation premium is 3 percent, the risk premium has declined to 3 percent and both are ppropriately reflected in the required return (or yleld to maturity) of the bonds. The bonds have 15 years remaining until laturity. ompute the new price of the bond. (Use a Financial calculator to arrive at the answers. Do not round intermediate iculations. Round the final answer to 2 decimal places.)
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