Assignment:
Two years ago, Phutki Corp. issued a $1,000 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 $1,000in the bond market. Phutki Corp. is now planning to issue a $1,000 par value bond with a coupon rateof 9 percent (semi-annual payments) that will mature 25 years from today. Assuming that theriskiness of the new bond is the same as the previous bond (i.e., the YTM on the new bond is equal to the current YTM on the previous bond), how much will investor's pay for this new bond?