The Altoona Company issued a 25 year bond 5 years ago with a face value of $1,000. the bond pays interest semiannually at 10% annual rate.
a. What is the bonds price today if the interest rate is 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 opportunites available to investors.
d. what is the price today if the interest rate is 10%?