1. Cost of debt with fees. Kenny Enterprises will issue a bond with a par value of $1000, a maturity of twenty years, and a coupon rate of 10.9% with semiannual payments, and will use an investment bank that charges $20 per bond for its services. What is the cost of debt for Kenny Enterprises at the following market prices?

a. $914.62

b. $1,005.63

c. $,1057.45

d. $1,168.13

2. Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with retirement income of $21,000 per month for 30 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 10 years at an estimated cost of $426,000. Third, after he passes on at the end of the 30 years of withdrawals, he would like to leave an inheritance of $850,000 to his nephew Frodo. He can afford to save $2,400 per month for the next 10 years. Required: If he can earn a 12 percent EAR before he retires and a 8 percent EAR after he retires, how much will he have to save each month in years 11 through 30?

$2,233.63

$3,201.65

$2,189.84

$2,146.04

$2,802.83