Natural Gas Producers Inc. (GPI) has an issue of 7-year, 8% annual coupon bonds

Question

Natural Gas Producers Inc. (GPI) has an issue of 7-year, 8% annual coupon bonds outstanding. The bonds, which were originally issued 15 years ago, have a face value (FV) of $1,000, a yield-to-maturity (YTM) or 10%, and are noncallable. What is the current market price of NGPI's bonds? O $992.89 O $1,128.29 O $767.24 $902.63 Are the bonds of Natural Gas Producers Inc, selling at a discount, at par, or at a premium? Par O Discount Premium : What is the current yield on Natural Gas Producers inc.'s outstanding bonds? 8.06% 8.86% o 7.09% O 10.439 What is the expected one-year capital gain yield on the bonds of Natural Gas Producers Inc:? 1.34% 0 1.14 1.03%

Explanation / Answer

Answer:Price=$80*PVIFA(10%,7)+1000*PVIF(10%,7)

=$80*4.8684+1000*0.513

=$389.47+513

=902.63

Answer: the bond is sellind at discount because coupon rate is less than yield to maturity.

Answer: Current yield=Annual coupon/Current bond price

=80/902.63

=8.86%

Answer:=0.91%

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