Wilson Oil Company issued bonds five years ago at $1,000 per bond. These bonds had a 25-year life when issued and the annual interest payment was then 16 percent. This return was in line with the required returns by bondholders at that point in time as described below: Real rate of return 10 % Inflation premium 3 Risk premium 3 Total return 16 % Assume that 10 years later, due to bad publicity, the risk premium is now 7 percent and is appropriately reflected in the required return (or yield to maturity) of the bonds. The bonds have 15 years remaining until maturity. Compute the new price of the bond. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume interest payments are annual.)

1 Present value of an annuity of $1, PVIFA PV A 1- Appendix D (1+i Percent 6% 9% 10% Period 1% 2% 3% 4% 5% 7% 8% 11% 12% 0.990 0.980 0.971 0.962 0.952 0.943 0.926 0.917 0.909 0,893 0.935 0.901 1.970 1.942 1.913 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.690 2 1.713 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.53 2.487 2.444 2,402 3.808 3.717 3.465 3.312 4 3.902 3.630 3.546 3.387 3.240 3.170 3.102 3.037 4.853 4,713 4.580 4.452 4,329 4.212 4.100 3.993 3.890 3.791 5 3.696 3.605 6 5.795 5.601 5.417 5.242 5.076 4,917 4.767 4.623 4.486 4.355 4.231 4.111 7 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.7 12 4.564 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.968 7.108 6.247 8.566 8.162 7.786 7.435 6.802 6.515 5.995 5.759 5.537 5.328 10 9.471 8.983 8.530 7.722 7.360 7.024 6.710 6.418 6.145 5.889 5.650 8.111 11 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 6.207 5.938 12 11.255 9.385 8.384 7.161 10.575 9.954 8.863 7.943 7.536 6.814 6.492 6.194 13 12.134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.750 6.424 14 7.786 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.367 6.982 6.628 15 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.061 7.606 7.191 6,811 16 14.7 18 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 7.824 7.379 6.974 17 8.544 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.022 7.549 7.120 12.659 18 16.398 14.992 13.754 11.690 10.828 10.059 9.372 8.756 8.201 7.702 7.250 19 17.226 15.678 13.134 12.085 11.158 10.336 9.604 8.950 7.366 14.324 8.365 7.839 20 18.046 14.877 13.590 12.462 10.594 9.818 9.129 8.514 7.963 7.469 16.35 11.470 7.843 25 17.413 14.094 12.783 11.654 9.823 8.422 22.023 19.523 15.622 10.675 9.077 30 25.808 22.396 19.600 17.292 15.372 13.765 12.409 11.258 10.274 9.427 8.694 8.055 40 32.835 27.355 23.115 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.951 8.244 50 39.196 31.424 25,730 21,482 18,256 15.762 13.80 12.233 10.962 9.915 9.042 8.304 Present value of $1, PVF PV= FV Appendix B (1+ i)" Percent 6% Period 1% 2% 3% 4% 5% 7% 8% 9% 10% 11% 12% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.842 0.980 0.961 0.943 0.925 0.907 0.890 0.873 0.857 0.826 0.812 0.797 0.971 0.942 0.915 0.889 0.864 0.840 0.8 16 0.794 0.772 0.751 0.731 0.712 0.961 0.924 0.888 0.855 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.823 4 0.951 0.906 0.863 0.822 0.784 0.747 0.7 13 0.681 0.650 0.593 0.567 0.621 6 0.942 0.888 0.837 0.790 O.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.933 0.871 0.813 0.760 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.711 0.923 0.853 0.789 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.914 0.837 0.766 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.905 0.820 0.744 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.896 0.804 0.722 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.287 1 1 0.317 12 0.887 0.788 0.701 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.286 0.257 13 0.879 0.773 0.681 0.601 0.469 0.368 0.326 0.290 0.258 0.229 0.530 0.415 0.870 0.758 0.388 0.299 0.263 0.232 0.205 14 0.661 0.577 0.505 0.442 0.340 15 0.861 0.642 0.555 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.743 0.481 16 0.394 0.292 0.252 0.218 0.163 0.853 0.728 0.623 0.534 0.458 0.339 0.188 0.231 0.170 17 0.844 0.714 0.605 0.513 0.436 0.371 0.317 0.270 0.198 0.146 18 0.494 0.350 0.180 0.836 O.700 0.587 0.416 0.296 0.250 0.212 0.153 0.130 19 0.828 0.686 0.570 0.331 0.277 0.232 0.164 0.138 0.116 0.475 0.396 0.194 0.820 0.673 0.456 0.312 0.178 20 0.554 0.377 0.258 0.215 0.149 0.124 0.104 25 0.780 0.610 0.478 0.375 0.295 0.233 0.184 0.146 0.116 0.092 0.074 0.059 30 0.742 0.412 0.308 0.174 0.057 0.552 0.231 0.131 0.099 0.075 0.044 0.033 0.307 40 0.672 0.453 0.208 0.142 0.097 0.067 0.046 0.032 0.022 0.015 0.011 0.608 0.141 0.087 0.021 0.013 0.003 0.372 0.228 0.054 0.034 0.009 0.005