You are considering an investment in the bonds of the Front Range Electric Company. The bonds pay interest semiannually, will mature in 15 years, and have a coupon rate of 6% on a face value of $1,000. Currently, the bonds are selling for $920. Solve using Excel

Required Rate of return = 6.8%

A. - Highest Price willing to pay

C. - Yield to Maturity

D. - Total Rate of Return Earned (as %)

1. Now assume that the settlement date for your purchase is 07/30/2020, the price maturity date is 07/30/2035, and the first call date is 07/30/2023. Using Price and Yield recalculate your answers to parts a, c, and d.
2. If market interest rates remain unchanged, do you think it is likely that the bond will be called in three years? Why or why not?
3. Create a chart that shows the relationship of the bonds price to your required return. Use a range of 0% to 15% in calculating the prices.