Question: Zheng Enterprises, issued $100 million of 15% coupon rate bonds in January 2000. The bonds have an initial maturity of 30 years. Bonds were sold at par and were callable in five years at 1110 (110 % of par value). It is now 2005, and interest rates have declined such that bonds of equivalent remaining maturity now sell to yield 11 %. How much would you be willing to pay today and why?
Should I still use a FV for the remaining time on 30 year initial maturity?