You are called in as a financial analyst to appraise the bonds of the Holtz Corporation. The $1,000 par value bonds have a quoted annual interest rate of 14 percent, paid semiannually. The yield to maturity on the bonds is 12 percent annually. There are 15 years to maturity. (Use a Financial calculator to arrive at the answers. Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. Compute the price of the bonds. Current price $ 1.137.65 b. With 10 years remaining to maturity, if yleld to maturity goes down substantially to 8 percent, what will be the new price of the bonds? New price of the bonds $ 1,407.71 c. With a price of $858 what is the yield to maturity if the bond has 10 years to maturity? Yield to maturity 17.0 Explanation a. 15 years to maturity PV PMT FV I/Y 128/2 = 6% 15 x 2 = 30 CPT PV -1,137.65 $70 ($140/2) $1,000 Answer: $1,137.65 b. FV N 10 x 2 = 20 I/Y 8%/2 = 48 PV CPT PV -1,407.71 PMT $70($140/2) $1,000 Answer: $1,407.71 c. PV PMT N I/Y CPT PV 8.50% FV $1,000 $858 $ 70 ($140/2) 10 x 2 = 20 Answer: 1/Y = 8.50%, 1% = 8.50% x 2 = 17.0% You are called in as a financial analyst to appraise the bonds of the Holtz Corporation. The $1,000 par value bonds have a quoted annual interest rate of 14 percent, paid semiannually. The yield to maturity on the bonds is 12 percent annually. There are 15 years to maturity. (Use a Financial calculator to arrive at the answers. Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. Compute the price of the bonds. Current price $ 1.137.65 b. With 10 years remaining to maturity, if yleld to maturity goes down substantially to 8 percent, what will be the new price of the bonds? New price of the bonds $ 1,407.71 c. With a price of $858 what is the yield to maturity if the bond has 10 years to maturity? Yield to maturity 17.0 Explanation a. 15 years to maturity PV PMT FV I/Y 128/2 = 6% 15 x 2 = 30 CPT PV -1,137.65 $70 ($140/2) $1,000 Answer: $1,137.65 b. FV N 10 x 2 = 20 I/Y 8%/2 = 48 PV CPT PV -1,407.71 PMT $70($140/2) $1,000 Answer: $1,407.71 c. PV PMT N I/Y CPT PV 8.50% FV $1,000 $858 $ 70 ($140/2) 10 x 2 = 20 Answer: 1/Y = 8.50%, 1% = 8.50% x 2 = 17.0%