In Problem 10, if the interest rate on similar bonds which are not convertible goes up from

Question:

In Problem 10, if the interest rate on similar bonds which are not convertible goes up from 10 percent to 12 percent, what will be the new pure bond value of the Pittsburgh Steel Company bonds? Assume the Pittsburgh Steel Company bonds have the same coupon rate of 8 percent as described in Problem 10 and that 25 years remain to maturity. Use semiannual analysis.

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...