You are given the following information concerning a noncallable, sinking fund debenture:

a. A $1,000 bond has a 7.5 percent coupon and matures after ten years. If current interest rates are 10 percentr what should be the price of the bond? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ b. If after six years interest rates are still 10 percent, what should be the price of the bond? Use Appendix E and Appendix D to answer the question. Assume that the bond pays interest annually. Round your answer to the nearest dollar. :5 c. Even though interest rates did not change in a and b, why did the price of the bond change? The price of the bond with the longer term is -Select- v than the price of the bond with the shorter term as the investors will collect the -Select- receive the principal within a longer period of time. v interest payments and d. Change the interest rate in a and b to 6 percent and rework your answers. Assume that the bond pays interest annually. Round your answers to the nearest dollar. Price of the bond {ten years to maturity): $ Price of the bond {four years to maturity): $ Even though the interest rate is 5 percent in both calcula ions, why are the bond prices different? The price of the bond with the longer term is -Select- v than the price of the bond with the shorter term as the investors will collect the -Select- v interest payments For a longer period of time. You are given the Following information concerning a noncallable. sinl-cing fund debenture: I Principal: $1,000 I Coupon rate of interest: 8 percent I Term to maturity: 1.6 years I Sinking fund: 5 percent of outstanding bonds retired annually: the balance at maturity a. If you buy the bond today at its face amount and interest rates rise to 1.2 percent after two years have passedr what is your capital gain or loss? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Use a minus sign to enter the loss amount, if anyr as a negative value. Round your answer to the nearest dollar. $ b. If you hold the bond 1.6 yearsr what do you receive at maturity? -S=|=ct- v c. What is the bond's current yield as of right now? Round your answer to the nearest whole number. '9": d. Given your price in a. what is the yield at maturity? Round your answer to the nearest whole number. M: e. What proportion of the total debt issue is retired by the sinking fund? Round your answer to the nearest whole number. % f. If the final payment to retire this bond is $1..000.000r how much must the firm invest annually to accumulate this sum if the firm is able to earn 8 percent on the invested funds? Use Appendix C to answer the question. Round your answer to the nearest dollar. $