You are called in as a financial analyst to appraise the bonds of Olsen's Clothing Stores. The $1,000 par value bonds have a quoted annual interest rate of 9 percent, which is paid semiannually. The yield to maturity on the bonds is 12 percent annual interest. There are 10 years to maturity. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Compute the price of the bonds based on semiannual analysis. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Bond price b. With 5 years to maturity, if yield to maturity goes down substantially to 10 percent, what will be the new price of the bonds? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) New bond price New bond price Appendix Present value of $1. PV PV=FV- Period 0 0 0 0 9% .917 .842 0.772 0.708 0.650 0.596 0.547 1% 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.861 0.853 0.844 0.836 0.828 0.820 0.780 0.742 0.672 0.608 2% 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 3% 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 .228 4% .962 .925 0.889 0.855 0.822 0.790 0.750 0.731 0.703 0.676 0.650 0.625 0.601 0.577 0.555 0.534 0.513 0.494 0.475 0.456 0.375 0.308 0.208 0.141 5% 0.952 0.907 0.864 0.823 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 0.377 0.295 0.231 0.142 0.087 Percent 6% 7% 0.943 0.935 0.890 0.823 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 0.544 055 0.508 0.527 0.425 0.497 0444 0.469 0.415 0.442 0.417 0.362 0.394 0.339 0.371 0.317 0.350 0.296 0.331 0.277 0.312 0.258 0233 0.184 0.174 0.131 0.097 0.067 0.054 0.034 8% 0.926 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.500 0.463 0.429 0.397 0.368 0.340 0.315 0.292 0.270 0.250 0.232 0.215 0146 0.099 0.046 0.021 0.502 0.460 0.422 0.388 0.356 0326 0.299 0.275 0.252 10% 0.909 0.826 0.751 0.683 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 11% 0.901 0.812 0.731 0.659 0.593 0.535 0.482 0.434 0.391 0.352 0.317 0.285 0.258 0.232 0.209 0.188 0.170 0.153 0.138 0.124 0.074 0.044 0.015 0.005 12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0 361 0322 0.287 0.257 0.229 0.205 0.183 0163 0.146 0.130 0.116 0104 0.059 0.033 0.011 0.003 0.388 0.231 0.212 0.194 0.178 0.116 0.075 0.032 0.013 0 Appendix B (concluded) Present value of $1 Period 0 0 0 0 13% 0.885 0.783 0.693 0.613 0.543 0.480 0.425 0.376 0.333 0.295 0.251 0.231 0.204 0.181 0.160 0.141 0.125 0.111 0.098 0.087 0.047 0.026 0.008 0.002 14% 0.877 0.769 0.675 0.592 0.519 0.456 0.400 0.351 0.308 0.270 0.237 0.208 0 1820 0.160 0.140 0.123 0.108 0.095 0.003 0.073 0.038 0.020 0.005 0.001 15% 16% 0.870 0.862 0.756 0.743 0.658 0.641 0.572 0.552 0.497 0.476 0.432 0.410 0.376 0.354 0.327 0.305 0.284 0.263 0.247 0.227 0.215 0.195 0.187 0.168 1630 .145 0.141 0.125 0.123 0108 0 107 0 093 0.093 000 0.081 0.069 0.070 0 060 0.061 0.051 0.0300024 0,015 0,012 0.004 0.003 0.001 0.001 17% 18% 0.855 0.847 0,731 0.718 0.624 0.609 0.534 0.515 0.456 0.437 0.390 0.370 0.333 0.314 0.285 0.266 0.243 0.225 0.208 0.19 .178 0.162 0.152 0.137 0.130 0.116 0.111 0.099 0.095 0084 0.081 0.071 0069 0.060 0.059 0.051 0,051 0.043 0.043 0 037 00200016 0.009 0.007 0.002 0.001 0 0 Percent 19% 0.840 .706 0.593 0.499 0.419 0.352 0.296 0.249 0.209 0.176 0.148 0.124 0.104 088 0.074 0.052 0,052 0.044 0.037 0031 0.013 0.005 0.001 0 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 .233 0.194 0.162 0.135 0.112 0.093 0.078 0065 0.054 0045 0.038 0.031 0026 0.010 0.004 0.001 0 25% 0.800 0,640 0.512 0.410 0.328 0.262 0.210 0.168 0.134 0.107 0,086 0.069 0.055 0044 0.035 0.028 0.023 0.018 0.014 0012 0.004 0.001 0 0 30% 35% 0.769 0 .741 0,592 0 .549 0.4550.406 .350 0.301 0.269 0 .223 0.207 0.165 0.159 0.122 0.123 0.091 0.094 0.067 0.073 0 .050 0.056 0.037 0.043 0.027 0.033 0.020 0.025 0,015 0.0200 011 0.015 0 .008 0.0120.006 0.009 0.005 0.007 0.003 0.005 0.002 0.001 0.001 0 0 0 0 0 0 0 40% 50% 0.714 0.667 0.510 0.444 0.364 0.296 0.260 0.198 0.186 0.132 0.133 0 .088 0.095 0.059 0.068 0.039 0.048 0.026 0.035 0.017 0.025 0.012 0.018 0.008 0 013 0.005 0.009 0 003 0006 0.002 0.005 0.002 0.003 0.001 0.002 0.001 0.002 0 0.0010 0 0 0 0 0 0 0 50... . Appendix D Present value of an annuity of $1, PVA PVA=A 4% 0.962 2.775 3.630 4.452 3 1% 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 17.225 18.046 22.023 25.803 32.835 39.196 2% 0.990 1.942 2.8-84 3.808 4.713 5.601 6472 7325 8.162 8.983 9.787 10.575 11.343 12.106 12.849 13.578 14.292 14.992 15.678 16.351 19.523 22.396 27.355 31.424 3% 0.971 1913 2.829 3.717 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 12.413 19.600 23.115 25.730 6.002 6.733 7.435 8.111 8.760 9.385 9.986 10.563 11.118 1 1652 12 166 12.659 13 134 13.590 15.622 17.292 19.793 21.482 Percent 5% 6% 7% 0.952 0.943 0.935 1.859 1.833 1.808 2723 2.673 2.624 3.546 3.465 3.387 43294212 4,100 5076 4 917 4.767 5.786 5582 5.389 6.463 6210 5.971 7 108 6 802 6.515 7.722 7.360 7.024 8.306 7.887 7.499 8.863 8.384 7.943 9.394 8.853 8.358 9.899 9.295 8.745 10 380 9 7129 108 10.838 10.106 9447 11 274 10.477 9.753 11.690 10.828 10.059 12 085 11.158 10.336 12 462 11.470 10.594 14.094 12.783 11.654 15.372 13.765 12.409 17.159 15.046 13.332 18.256 15.762 13.801 8% 0.926 1.783 2.577 3.312 3.993 4.623 5.205 5.747 6.247 6.710 7.139 7.536 7.904 8.244 8.559 8.851 9.122 9.372 9.604 .818 10.675 11.258 11.925 12.233 9% 10% 11% 12% 0.917 0.909 0.901 0.893 1.759 1.736 1.713 1.690 2.531 2.487 2.444 2.402 3.240 3.1703.102 3.037 .890 3.791 3.696 3 605 4 486 4,355 4.231 4.111 5033 4868 4.712 4564 5.535 5.335 5.146 4968 5.995 5.759 5.537 5328 6.418 6.145 5.889 5.650 6.805 6 .495 6.207 5.938 7.161 6 .814 6.492 6.194 7.487 7.103 6.750 6.424 7.786 7.367 6 .982 6.628 8061 7606 7.1916811 8.313 7.824 7379 6974 8.544 8022 7549 7.120 87568.201 7.702 7250 8950 8.365 7.839 7366 129 8.514 7.963 7469 9.823 9 .077 8.422 7.843 10 274 9.427 9.694 8055 10.757 9.779 8 .951 8.244 10.9629 .915 9.042 8.304 9 9 Appendix D (concluded) Present value of an annuity of $1 Period 13% 08.85 1.668 2.351 2.974 3.517 3.998 4.423 4.799 5.132 5.426 5 687 5.918 2902 14% 15% 0.8770870 1.647 1626 2322 2283 2.914 2855 3.433 3.352 3.889 3.784 4.288 4.160 4.639 4497 4.946 4.772 5.216 5,019 5.453 5234 5.660 5421 5.842 5583 6.002 5724 6.142 5847 6.265 5.954 6.373 6.047 6.467 6.128 6.550 6.198 6.623 6.259 6.873 6.464 70036.566 7.105 6,642 7.133 6.661 Percent 16% 17% 18% 19% 0.862 0.85508470.840 1.605 1.585 1.566 1.547 2.246 2210 2.174 2.140 2.798 27432 6902.639 3.274 3199 3 .127 3.058 3.685 3 .589 3.498 3.410 4.039 3.922 3.812 3.706 4.344 4 207 4078 3.954 4.607 4 .451 4.303 4.163 4.833 4.659 4.494 4.339 5.0294836 4.656 4,485 5.197 4988 47934611 5.342 5110 4.910 4.715 5.468 5229 5.008 5.575 5324 5.092 4.875 5.668 5.405 5.162 4.938 5.749 5.475 5.222 4.989 5.818 5.534 5.273 5.033 5.584 5.070 5.929 5.353 5.101 6.097 5.766 5.467 5.195 6.177 5829 5.517 5.235 6.233 5 871 5.548 5.258 6.246 5.880 5.554 5.262 20% 0.833 1.528 2 106 2 589 2.99 3.326 3.605 3.837 4.031 4.192 4 327 4439 4533 4611 4 675 4.730 4.275 4.912 4.843 4.870 4.948 4 979 4 997 4.999 25% 0.800 1.440 1,952 2.352 2.689 2.951 3.161 3.329 3.463 3.571 3.656 3.725 3.780 3.824 3.859 3.897 3.910 3.928 3.942 3.954 3.985 3.995 3.999 4.000 30% 35% 40% 0.769 0.741 0.714 1.361 1.289 1.224 1.816 1.696 1.589 2 166 1.997 1849 2.436 2.220 2.035 2.643 2.385 2.168 2.508 2.263 2.925 2.598 2.331 3.019 2.665 2.379 3.092 2.715 2.414 3.147 2.752 2438 3.190 2.7792 .456 3223 2.799 2.469 3249 2814 2.478 3268 2.825 2.484 3.283 2.834 2.489 3.295 2.840 2.492 3.304 2.844 2.494 3.311 2.848 2.496 3.316 2.850 2.497 3.3292.856 2.499 3.332 2 857 2.500 3.333 2 857 2.500 3.333 2.857 2.500 50% 0.667 1.111 1407 1605 1.737 1.824 1.883 1.922 1.948 1.965 1.977 1.985 1990 1.993 1 995 1.997 1.998 1.999 1.999 1.999 2.000 2000 2000 2000 6.122 6.302 6.462 5877 5 316 6.504 6.729 6.840 6.938 7.025 7.330 7.496 7.634 7,675 5.628