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1.8 points EEDOK Hlnt F'l'inl Barry's Steroids Company has $1,000 par value bonds outstanding at 14 percent interest. The bonds will mature in 50 years. If the percent yield to maturity is 11 percent. what percent of the total bond value does the repayment of principal represent? Assume interest payments are annual. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Principal as a percentage of bond price % Refer to Table 1071, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market [yield to maturity) decline from 25 percent to 11 percent. 1.8 a. What is the bond price at 25 percent? points eBook HII'It Prim b. What is the bond price at 11 percent? Bond pn'ce I c. What would be your percentage return on investment if you bought when rates were 25 percent and sold when rates were 11 percent? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Return on investment I E 1.8 points eBook Hll'it F'rlnl Tom Cruise Lines Inc. issued bonds five years ago at $1.000 per bond. These bonds had a 357year life when issued and the annual interest payment was then 14 percent. This return was in line with the required returns by bondholders at that point as described below: Real rate o'F return 3% Inflation premium 6 Risk premium 5 Total return 14% l Assume that ve years later the inflation premium is only 3 percent and is appropriately reflected in the required return [or yield to maturity) of the bonds. The bonds have 30 years remaining until maturity. Compute the new price of the bond. Use Appendix B and Appendix D for an approximate answer but calculate your nal answer using the formula and nancial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume interest payments are annual.) New price of the bond I 1.8 points EBDOk F'rlhl Katie Pairy Fruits Inc. has a $2,900 21year bond outstanding with a nominal yield 0f18 percent (coupon equals 18% x $2,900 = $522 per year). Assume that the current market required interest rate on similar bonds is now only 12 percent. 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 current price of the bond. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume interest payments are annual.) Current price of the bond I b. Find the present value of6 percent x $2,900 (or $174) for 21 years at 12 percent. The $174 is assumed to be an annual payment. Add this value to $2,900. (Do not round intermediate calculations. Round your nal answer to 2 decimal places. Assume interest payments are annual.) Present value I 1.8 points EEOOk HlI'lt Film Lance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are trading at well below par value. He has his eye on a bond issued by the Leisure Time Corporation. The $1,000 par value bond pays 8 percent annual interest and has 17' years remaining to maturity. The current yield to maturity on similar bonds is 13 percent. Useppendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. What is the current price of the bonds? (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume interest payments are annual.) Current price of the band I b. By what percent will the price of the bonds increase between now and maturity? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Price increases by I % 6 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 8 percent, which is paid semiannually. The yield to maturity on the bonds is 10 percent annual interest. There are 20 years to maturity. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula 1.8 and financial calculator methods. points a. Compute the price of the bonds based on semiannual analysis. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) eBook Hint Bond price Print b. With 15 years to maturity, if yield to maturity goes down substantially to 6 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