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1.) Cherry Hill Inc. issued 30- year bonds during tough economic times. At the time of issue, the coupon rate was 14% but the current market rates are currently 6.5%. Luckily, the bonds were issued with a call feature. The bonds had a call protection period of 15 years and that was 9 years ago. The bond indenture allowed for the bondholder to be compensated for 1-years extra interest payment if the bonds were called. What is the current value of each bond if there was a face value of $1,000? (Assume semiannual compounding)

face value FV coupon rate PMT original issue RATE years outstanding NPER current price PV

2.) Harrington Inc. issued callable bonds 5 years ago. Each bond had a call protection period of 12 years with a call premium of one extra interest payment. The coupon rate on each bond was 16% and current rates are 7.2%. The face value of each bond is $2,000. What is the value of each bond? (Assume semiannual compounding)

face value FV coupon rate PMT original issue RATE years outstanding NPER current price PV

3.) A $5,000 bond is currently selling for $4,768. It was originally a 25-year bond issued 14 years ago with a coupon rate of 5.2%. What is the current yield to maturity? (Assume semiannual compounding)

face value FV coupon rate PMT original issue RATE years outstanding NPER current price PV

4.) The Altoona Company issued a 25-year bond 5 years ago with a face value of $1,000. The bond pays interest semiannually at a 10% annual rate. a. What is the bond's price today if the interest rate on comparable new issues is 12%? b. What is the price today if the interest rate is 8%? c. Explain the results of parts a and b in terms of opportunities available to investors. d. What is the price today if the interest rate is 10%? e. Comment on the answer to part d.

5.) Calculate the market price (i.e PV) of a $1,000 face value bond under the following conditions. Coupon Rate Time until maturity market rate a. 12% 15 yrs 10% b. 7% 5 yrs 12% c. 9% 25 yrs 6% d. 14% 30 yrs 9% e. 5% 6 yrs 8%

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