Problem 13-02 3. A $1,000 bond has a 6.5 percent coupon and matures after ten years. If current interest rates are 9 percent, 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 five years interest rates are still 9 percent, what should be the price of the bond? Use Appendix Band Appendix D to answer the question. Assume that the bond pays interest annually. Round your answer to the nearest dollar $ 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 M than the price of the bond with the shorter term as the investors will collect the Select: interest payments and receive the principal within a longer period of time d. Change the interest rate in and b to 4 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 (five years to maturity): S Even though the interest rates 4 percent in both calculations, why are the bond prices different? The price of the bond with the longer term is Select than the price of the bond with the shorter term as the investors will collect the select interest payments for a longer period of time Interest Factors for the Present Value of One Dollar 14% 15% 24% 28% 1 = 52 at 233 184 146 116 .092 059 174 131 099 025 057 033 007 2004 Interest Factors for the Present Value of an Annuity of One Dollar Time Period (e.g. year) 1% 2% 2% 4% 5% GN 7% 10% 12% 14% 16% 18% 20% 24% 28% 32% 30% 1 0.990 0,980 0,971 0967 0.952 0943 0935 0.926 0.917 0909 0.893 0.877 0862 0.847 0.833 0.806 0.781 0.758 0.735 2 1970 1942 1913 1.886 1859 1833 1.808 1.783 1.759 1.736 1690 1647 1,605 1.566 1.528 1.457 1392 1.332 1276 3 2.941 2884 2829 2775 2.723 2.673 2624 2577 2531 2.487 2402 2322 2.246 2.174 2106 1981 1.868 1.766 1674 4 3902 3808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 2037 2914 2.798 2.690 2589 2.404 2.241 2.096 1966 5 4.853 4.713 4580 4452 4.329 4212 4.100 3.993 3.890 3.791 3,605 3.433 3.274 3.127 2991 2.745 2532 2349 2.181 6 5.795 5.601 5.417 5.242 5.076 4917 4.766 4623 4.486 4.355 4.111 3.889 3.685 3.498 3.326 3.020 2759 2.534 2399 7 6.728 6.472 6.230 6.002 5.786 5582 5.389 5.206 5,033 4868 4.564 4.288 4.039 3.812 3.605 3.242 2937 2.678 2.455 8 7.652 7325 7020 6733 6.463 6,210 5.971 5.747 5.535 5335 4.968 4639 4 344 4.078 3.837 3.421 3.076 2.786 2.540 9 85668.162 7786 7435 2108 6.802 6.515 6.247 5.985 5.759 5.328 4946 4.607 4 303 4,031 3.566 2.184 2.868 2,603 10 9.471 8.983 8.530 8.111 7722 7360 7.024 6.710 6.418 6.145 5.6505.216 4833 4.494 4.193 3.682 3.269 2.930 2.650 11 10.368 9.787 9.253 8.760 8.30678877499 2139 6,805 6.495 5.988 5.453 50294,656 4327 3.776 3.335 2978 2683 12 11 255 10.575 9.954 9.385 8.363 8384 79432536 2.161 6,814 6.194 5.660 5.19% 4.793 4.439 3.851 3.387 3.013 2.708 13 12.134 11:34B 10635 9986 9.394 8.534 8.358 7904 7487 2103 6.424 5 842 5 342 4.910 4.533 3912 3.427 3040 2.727 14 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7786 7367 6.628 6.002 5.468 5008 4611 3962 3.459 3.061 2.740 15 13.865 12.849 11.938 11.118 10 3809712 9.108 8.559 8,060 2606 6.811 6.142 5.575 5.092 4.675 4.001 3.483 3.076 2.750 16 14.718 17.578 12.561 11,652 10.878 10.106 0.447 8.851 8:312 7824 6974 6,765 5669 5:162 4.730 4000 2502 2088 2.758 12 15.562 14.292 13.166 12.166. 11.274 10.477 9.763 9.122 8.544 8002 7120 6373 5749 5.222 4775 4059 3.518 3097 2.763 18 16398 14.992 13.754 12.659 11690 10.828 10.059 9.372 8.756 8.2017.250 6.467 5.818 5.272 4.812 4,080 3.529 3.104 2.767 19 17.226 15678 14.324 13.134 12.08S 11.158 10.336 9.604 8.950 8.365 7366 6550 5.877 5.316 4.844 4,097 3539 2.109 2770 20 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.128 8.514 7.469 6,623 5.929 5.353 4.870 4,110 3.546 3.113 2.772 25 22.023 19.522 17413 15.622 14.094 12,783 11654 10,675 98239.077 7,843 6873 6.097 5.467 4948 4.147 3564 3.12 2.776 30 25.80B 22.937 19.600 17.292 15 373 13.765 12.409 11.258 10.274 9.427 8.055 7.003 6.177 5.517 4.9794.160 3.569 3.124 2.778