(Answered) Two years ago phutki colp issued a 1900 par value 11

Management Studies

Two years ago, Phutki Colp. issued a $1,900 par value, 11 percent (annual payment) coupon bond. At the time the bond was issued it had 15 years to maturity. Currently this bond is selling for $l,?DD in the bond market. Phutki Corp. is now planning to issue a $1,0?0 par value bond with a coupon rate of 9 percent (semi-annual payments} that will mature 30 years from today. Assuming that the riskiness of the new bond is the same as the previous bond (i.e., the YTM on the new bond is equal to the current Y'I'M on the previous bond), how much will investor's pay for this new bond?

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