1. A shipping company sold an issue of 14-year $1,000 par bonds to build new ships. The bonds pay 6.75% interest, compounded semiannually. Today's required rate of return is 8.7%. How much should these bonds sell for today? Round to two decimal places.
Show me how to do it on Excel.
2. Kollo Enterprises has a beta of 0.70, the real risk-free rate is 2.00%, investors expect a 3.00% future inflation rate, and the market risk premium is 4.70%. What is Kollo's required rate of return? Do not round your intermediate calculations.
Please explain in detail all acronyms used in formulas.