Table 10-1 Bond price table Yield to Maturity 2% 4% 6% 7% 8% 9% 10% 11% 12% 13% (10% Interest Payment, 20 Years to Maturity) PV of PV of Coupons Principal $1,635.14 $672.97 1,359.03 456.39 1,146.99 311.80 1,059.40 258.42 981.81 214.55 912.85 178.43 851.36 148.64 796.33 124.03 746.94 103.67 702.48 86.78 662.31 72.76 592.88 51.39 486.96 26.08 395.39 11.53 + + + + + + + + + + + + + + || || || || || || || || || || || || || || Bond Price $2,308.11 1,815.42 1,458.80 1,317.82 1,196.36 1,091.29 1,000.00 920.37 850.61 789.26 14% 16% 20% 25% 735.07 644.27 513.04 406.92 Midland Oil has $1,000 par value bonds outstanding at 16 percent interest. The bonds will mature in 25 years. Compute the current price of the bonds if the present yield to maturity is: (Do not round intermediate calculations. Round your final answers to 2 decimal places. Assume interest payments are annual.) Bond Price a. 15 percent b. 14 percent 16 percent c. Exodus Limousine Company has $1,000 par value bonds outstanding at 18 percent interest. The bonds will mature in 40 years. Compute the current price of the bonds if the percent yield to maturity is: (Do not round intermediate calculations. Round your final answers to 2 decimal places. Assume interest payments are annual.) Bond Price $ 1,537.87 a. 6 percent b. 10 percent Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 25 percent to 11 percent. a. What is the bond price at 25 percent? Bond price $ 406.92 b. What is the bond price at 11 percent? Bond price $ 920.37 c. What would be your percentage return on investment if you bought when rates were 25 percent and sold when rates were 11 percent? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Return on investment 126.18%