What will the holder receive when the bond matures if the


A bond has the following features:

Coupon rate of interest: 5 percent

Principal: $1,000

Term to maturity: 10 years

a. What will the holder receive when the bond matures?

b. If the current rate of interest on a comparable debt is 8 percent, what should be the price of this bond? Would you expect the firm to call this bond Why?

c. If the bond has a sinking fund that requires the firm to set aside annually with the trustee sufficient funds to retire the entire issue at maturity, how much must the firm remit each year for 10 years if the funds earn 8 percent annually and there is $100 million outstanding?

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Financial Management: What will the holder receive when the bond matures if the
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