please answer question 7

As shown in table 1 the company raised $100mn through a 30 year bond (F.V.=\$100) with a coupon of 10%. At the time of bond issue the company's other maturity bonds also traded in the market. Answer the following questions related to this bond issue: Q1. Ascertain the cash outflows for the bond till their maturity. Q2 If the YTM in the market for a 30 year bond is 10%, compute the price of the above bond? What is your inference? Q3. If after the issue the interest rates dropped by 1% then what would be the price of the bonds? The bond would trade at to the face value. Q4. If after the issue the interest rates rise by 1% then what would be the price of the bonds? The bond would trade at to the face value. Q5. What principle of bonds pricing do you infer from the results of Q3 and Q4 ? 5 Reliance Industries Limited Annual Report 1998-99 Q6. Just after the issue the interest rates dropped by 1%. What is the current yield of the bond? What is the YTM? What if after the issue the interest rates for the bond rises by 1% ? What do you infer? Q7. Compute the Present value of bond at different point in time (n=5,10,15,20,25,30) till the maturity of the bond when interest rate dropped by 1% after the issue? Q8. Compute the Present value of bond at different point in time (n=5,10,15,20,25,30) till the maturity of the bond when interest rate rise by 1% after the issue? Q9 From the results of Q7 and Q8 we infer that the on the bond as the bond approaches maturity. Source: Hellance inqustnes Annual Meport 19y0-y