1. One year ago Lerner and Luckmann Co. issued 15-year, noncallable, 9.9% annual coupon bonds at their par value of $1,000. Today, the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they now have 14 years to maturity?
a. $1,413.12
b. $1,416.06
c. $1,419.00
d. $1,424.88
e. $1,421.94
2. Suppose you earned a $380,000 bonus this year and invested it at 8.25% per year. How much could you withdraw at the end of each of the next 20 years?
a. $39,426.66
b. $39,432.76
c. $39,438.86
d. $39,420.56
e. $39,414.46