PROBLEMS Basic Problems (For the first 20 band problems, assume interest payments are on an annual basis.) I. The African Gold Company has $1,000 par value bonds outstanding at 7 per- cent interest. The bonds will mature in 15 years. Compute the current price of the bonds if the present yield to maturity is: a. 6 percent. b. 8 percent. C. 12 percent. 2. Aussie Software has $1,000 par value bonds outstanding at 14 percent interest. The bonds will mature in 20 years. Compute the current price of the bonds if the present yield to maturity is: a. 11 percent. b. 13 percent. ac. 16 percent. 3.Barrier Reef Excursions has $1.000 par value bonds outstanding at 10 percent interest. The bonds will mature in 40 years. Compute the current price of the bonds if the percent yield to maturity is: a. 4 percent. b. 14 percent. 4. Referring to Problem 3, part b. what percent of the total bond value does the repayment of principal represent? 5. Easter Island Biochemical Co. has a $1,000 par value bond outstanding that pays | 1 percent annual interest. The current yield to maturity on such bonds in the market is 8 percent. Compute the price of the bonds for these maturity dates: a. 30 years. b. 15 years. c. I year. 6. The Hague Court Supplies Company has a $1.000 par value bond outstand- ing that pays 13 percent annual interest. The current yield to maturity on such bonds in the market is 17 percent. Compute the price of the bonds for these maturity dates: a. 30 years. b. 15 years.Advanced Problems 29. Ecology Labs, Inc., will pay a dividend of $3 per share in the next 12 months (D,). The required rate of return (K.) is 10 percent and the constant growth rate is 5 percent. a. Compute Po. (For parts b, c, d in this problem, all variables remain the same except the one specifically changed. Each question is independent of the others.) b. Assume Ke, the required rate of return, goes up to 12 percent; what will be the new value of Po? C. Assume the growth rate (g) goes up to 7 percent; what will be the new value of Po? Ke goes back to its original value of 10 percent. d. Assume D, is $3.50; what will be the new value of Po? Assume K. is at its original value of 10 percent and g goes back to its original value of 5 percent. 30. Sterling Corp. paid a dividend of $.80 last year. Over the next 12 months, the dividend is expected to grow at a rate of 10 percent, which is the constant growth rate for the firm (g). The new dividend after 12 months will represent D, . The required rate of return (K.) is 14 percent. Compute the price of the stock (Po)