1 value: 4.00 points You are called in as a financial analyst to appraise the bonds of Olsen's Clothing Stores. The $1,000 par value bonds have a quoted annual interest rate of 11 percent, which is paid semiannually. The yield to maturity on the bonds is 14 percent annual interest. There are 15 years to maturity. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods a. Compute the price of the bonds based on semiannual analysis. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Bond price b. With 10 years to maturity, if yield to maturity goes down substantially to 10 percent, what will be the new price of the bonds? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) New bond price 1 PV = FV 1+ Present value of $1, PV Appendlx B Percent 9% 10% Period 1% 2% 3% 4% 5% 6% 7% 8% 11% 12% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.980 0.961 0,943 0.907 0.890 0.873 0.857 0.842 0.826 0.925 0.812 0.797 0.971 0.942 0.915 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.712 3 0.731 0.961 0.823 0.792 0.763 0.735 0.708 4. 0.924 0.888 0.855 0.683 0.659 0.636 5 0.951 0.906 0.863 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.567 0.593 0.942 0.888 0.837 0.746 0.705 0.666 0.630 0.596 6 0.790 0.564 0.535 0.507 7 0.933 0.871 0.813 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.923 0.853 0.627 0.582 0.540 0.789 0.731 0.677 0.502 0.467 0.434 0.404 0.837 0.766 0.592 0.500 0.460 0.914 0.703 0.645 0.544 0.424 0.391 0.361 0.905 10 0.820 0.744 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.896 0.722 0.585 0.527 0.475 0,429 0.804 0.650 0.388 0.350 0.317 0.287 12 0.887 0.788 0.701 0.625 0.557 0.497 0,444 0.397 0.356 0.319 0.286 0.257 0.879 0.773 0.681 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.258 0.229 0.870 0.758 0.661 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.205 14 15 0.861 0.743 0.642 0.555 0,481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 16 0.853 0.728 0.623 0.534 0.458 0.394 0.339 0,292 0.252 0.218 0.188 0.163 17 0.844 0.714 0.605 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.170 0.146 18 0.836 0.700 0.587 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.153 0.130 19 0.828 0.686 0.570 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 20 0,820 0.673 0.554 0.377 0.312 0.258 0.215 0.178 0.149 0.124 0.104 0.456 25 0.780 0.610 0.478 0.375 0.295 0.233 0.184 0.146 0.116 0.092 0.074 0.059 30 0.742 0.308 0.231 0.174 0.131 0.075 0.044 0.552 0.412 0.099 0.057 0.033 0.672 0.453 0,307 0.208 0.142 0.097 0.067 0.046 0.032 0.022 0.015 0.011 50 0.608 0.372 0.228 0.087 0.054 0.034 0.021 0.013 0.009 0.005 0.003 0.141 Appendlx B (concluded) Percent Period 13% 14% 15% 25% 35% 50% 16% 17% 18% 19% 20% 30% 40% 0.885 0.877 0.870 0.855 0.800 0.741 0.667 0,862 0.847 0.840 0.833 0.769 0.714 0.783 0.769 0.756 0.731 0.694 0.640 0.592 0.549 0.510 0.444 0.743 0.718 0.706 0.579 0.455 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.512 0,406 0.364 0.296 0.613 0.572 0.350 0.260 4 0.592 0.552 0.534 0.515 0.499 0.482 0.410 0.301 0.198 0.269 0.543 0,519 0,497 0.476 0.456 0.437 0.419 0.402 0.328 0.223 0.186 0.132 0.480 0.432 0.335 0.207 0.456 0.410 0.390 0.370 0.352 0.262 0.165 0.133 0.088 0.425 0.400 0.376 0.354 0.333 0.314 0.296 0.279 0.210 0.159 0.122 0.095 0.059 7 0.376 0.327 0.285 0.233 0.123 0.351 0.305 0.266 0.249 0.168 0.091 0.068 0.039 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194 0.134 0.094 0.067 0.048 0.026 0.295 0.247 0.208 0.073 10 0.270 0.227 0.191 0.176 0.162 0.107 0.050 0.035 0.017 1* 0.261 0.237 0.215 0.195 0.178 0.162 0.148 0.135 0.086 0.056 0.037 0.025 0.012 0.231 0.187 12 0.208 0.168 0.152 0.137 0.124 0.112 0.069 0.043 0.027 0.018 0.008 13 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0.093 0.055 0.033 0.020 0.013 0.005 0.181 14 0.160 0.141 0.125 0.111 0.099 0.088 0.078 0.044 0.025 0.015 0.009 0.003 15 0.160 0.140 0.123 0.108 0.095 0.084 0,074 0.065 0.035 0.020 0.011 0.006 0.002 16 0.141 0.123 0.107 0.093 0.081 0,071 0.062 0.054 0.028 0.015 0.008 0.005 0.002 17 0.108 0.069 0.060 0.052 0.045 0.012 0.006 0.003 0.001 0.125 0.093 0.080 0.023 18 0.111 0.095 0.081 0.069 0.059 0.051 0.044 0.038 0.018 0.009 0,005 0.002 0.001 19 0.098 0.083 0.070 0.060 0.051 0,043 0.037 0.031 0.014 0.007 0.003 0.002 20 0,087 0.073 0,061 0.051 0.043 0,037 0.031 0.026 0.012 0.005 0.002 0.001 25 0 0.047 0,038 0.030 0.024 0.020 0.016 0.013 0.010 0.004 0.001 0.001 30 0.026 0,020 0.015 0.012 0,009 0,007 0.005 0.004 0.001 0 40 0.008 0.005 0.004 0.003 0.002 0.001 0.001 0.001 0 0 0 0 0 0 0 50 0.002 0.001 0.001 0.001 0 0 0 0 (1 + Present value of an annulty of $1, PV TFA Appendlx D PV= A Percent 2% Period 1% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 1 . 1.970 1.942 1.913 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.713 1.690 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.402 2.941 2.487 2.444 3.037 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.102 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.696 3.605 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.231 4.111 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.712 4.564 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.968 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.537 5.328 10 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 5.889 5.650 6.418 6.145 11 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 6.207 5.938 12 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.492 6.194 13 12.134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.750 6.424 14 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.982 6.628 15 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.061 7.606 7.191 6.811 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 7.824 7.379 6.974 16 17 15.562 14.292 13.166 12.166 10.477 9.763 9.122 8.022 7.549 7.120 11.274 8.544 18 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.702 7.250 19 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.839 7.366 20 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.963 7.469 25 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 8.422 7.843 30 25.808 22.396 19.600 17.292 15.372 13.765 12.409 11.258 10.274 9.427 8.694 8.055 40 32.835 27.355 23.115 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.951 8.244 50 39.196 31.424 25.730 21.482 18.256 15.762 13.801 12.233 10.962 9.915 9.042 8.304 Appendlx D (concluded) Percent 20% 30% Period 13% 14% 15% 16% 17% 18% 19% 25% 35% 40% 50% 0.667 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.800 0.769 0.741 0.714 1 1,668 1,647 1,626 1.605 1.585 1,566 1.547 1.528 1,440 1.361 1.289 1.224 1,111 2.361 2.210 2,174 2.140 1.952 1,816 1.696 1,589 1.407 2.322 2.283 2.246 2.106 1.605 2.974 2.914 2,855 2.798 2.743 2.690 2.639 2.589 2.362 2.166 1.997 1.849 1,737 3.517 3.433 3.352 3.274 3.199 3.127 3.058 2.991 2.689 2.436 2.220 2.035 3.998 3.889 3.784 3.685 3.589 3.498 3.410 3.326 2.951 2.643 2.385 2.168 1.824 4,423 7 4.288 4.160 4.039 3.922 3.812 3.706 3.605 3.161 2.802 2.508 2.263 1.883 4.799 4,639 4.487 4.344 4.207 4.078 3.954 3.837 3.329 2.925 2.598 2.331 1,922 4.031 5.132 4.946 4.772 4,607 4.451 4,303 4.163 3.463 3.019 2,665 2.379 1.948 4.83: 10 5,426 5.216 5.019 4,192 3,571 3.092 2.715 1,965 4.659 4,494 4.339 2.414 1: 4,836 3.147 1.977 5.687 5,453 5.234 5.029 4,656 4.486 4,327 3.656 2.752 2,438 1.985 15 5.918 5.660 5.421 5.197 4.988 4,793 4.611 4,439 3.725 3.190 2.779 2,456 1.990 15 6.122 5.842 5.583 5.342 5.118 4,910 4.715 4,533 3.780 3.223 2.799 2.469 6.302 6.002 5.724 5.468 5.229 5,008 4.802 4.611 3.824 3.249 2.814 2,478 1.993 1.995 6.462 6.142 5.847 5.575 5.324 5.092 4.876 4.675 3.859 3.268 2.825 2.484 14 16 6.604 6.265 5.954 5.668 5.405 5.162 4.938 4,730 3.887 3.283 2.834 2.489 1.997 17 6.729 5.749 5,222 6.373 6,047 5.475 4.988 4.775 3.910 .295 2.840 2,492 1.998 18 6,840 6.467 6.128 5.818 5,534 5.273 5.033 4.812 3.928 3.304 2.844 2.494 1.999 10 6,938 6.550 6.198 5.877 5.584 5.316 5.070 4.843 3.942 3.311 2.848 2.496 1.999 20 7.025 6.623 6.259 5.929 5.628 5.353 5.101 4.870 3.954 3.316 2.850 2.497 1.999 25 7.330 6.873 6.464 6.097 5.766 5.467 5.195 4.948 3.985 3.329 2.856 2.499 2.000 30 7,496 7.003 6.566 6.177 5.829 5.517 5.235 4.979 3.995 3.332 2.857 2.500 2.000 40 7.634 7.105 6.642 6.233 5.871 5.548 5.258 4.997 3.999 3.333 2.857 2.500 2,000 7,675 7.133 6.661 6.246 5.880 5.554 5.262 4,999 4.000 3.333 2,857 2,500 2,000