Rachette Corp. has 18-year bonds outstanding. These bonds, which pay interest semiannually, have a coupon rate of 11.420 percent and a yield to maturity of 8.48 percent.

a. Compute the current price of these bonds. (Round intermediate calculations to 2 decimal places, e.g. 1.25 and final answer to 2 decimal places, e.g. 15.25.)

Current price $

b. If the bonds can be called in five years at a premium of 28.5 percent over par value, what is the investor’s realized yield? (Round intermediate calculations to 2 decimal places, e.g. 1.25 and final answer to 2 decimal places, e.g. 15.25%.)

Effective annual yield  %

c. If you bought one of these bonds today, what is your expected rate of return? Explain (Round intermediate calculations to 2 decimal places, e.g. 1.25 and final answer to 2 decimal places, e.g. 15.25%.)

Realized rate of return %