Question

Answer the following questions:

1.) Betagistic Corp has 9.5% semiannual-pay bonds outstanding that have a $1,000 par value that were issued 5 years ago at par value and have 20 years remaining until maturity. The bonds currently sell for $1,190.50. What is the YTM for these bonds?

2.) XYZ Corp. has entered into a lease agreement to acquire some equipment that it uses in manufacturing. The lease agreement is for a seven-year term with semiannual lease payments. The negotiated price for the equipment that is used to determine the lease payments is $9.5 million and the residual value of the equipment seven years from now is $1.5 million. If the interest rate on the lease is 6.5% per year, compounded semiannually, what is the semiannual lease payment?

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