Question: Q2 Problem Solving (10 marks) Lee, Braun and James Company pays a 11 percent coupon rate on debentures due in 25 years. The current

Q2 Problem Solving (10 marks) Lee, Braun and James Company pays a

Q2 Problem Solving (10 marks) Lee, Braun and James Company pays a 11 percent coupon rate on debentures due in 25 years. The current yield to maturity on bonds of similar risk is 8 percent. The bonds are currently callable at $1,220. The theoretical value of the bonds will be equal to the present value of the expected cash flow from the bonds. Assume the par value of the bonds is $1,000. Use Appendix B and Appendix D. a. Find the theoretical market value of the bonds using semiannual analysis. (Do not round intermediate calculations. Round "PV Factor" to 3 decimal places. Round the final answer to 2 decimal places.) Price of the bond $ b. Do you think the bonds will sell for the price you arrived at in part a? Yes No Please interpret your answers.

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