Problem $10-13($Algo$)$ Effect of yield to maturity on bond price $[$LO$10-3]$

Tom Cruise Lines Incorporated issued bonds five years ago at $$1,000$ per bond. These bonds had a $20-$year life when issued and the annual interest payment was then $13$ percent. This return was in line with the required returns by bondholders at that point as described below:

Real rate of return $4\%$

Inflation premium $5$

Risk premium $4$

Total return $13\%$

Assume that five 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 $15$ years remaining until maturity.

Compute the new price of the bond. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Note: Do not round intermediate calculations. Round your final answer to $2$ decimal places. Assume interest payments are annual.SHOW YOUR WORK PLEASE I HAVE TO UNDERSTAND HOW TO DO THIS