1. Panhandle Ventures' recently issued bonds that mature in 20 years. They have a par value of $1,000 and an annual coupon of 5%. If the current market interest rate is 8%, at what price should the bonds sell?
A. None of the choices is correct
B. $705.46
C. $490.91
D. $996.98
E. $1373.87
2. George Jefferson established a trust fund that provides $175,500 in scholarships each year for worthy students. The trust fund earns a 4 percent rate of return. How much money did Mr. Jefferson contribute to the fund assuming that only the interest income is distributed?
$7,020,000
$4,387,500
$4,212,000
$3,096,873
$5,265,000