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What is the best estimate of these bonds remaining life

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Reference no: EM132822350

Problem - EXPECTED INTEREST RATE - Lourdes Corporation's 12% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 25 years, are callable 6 years from today at $1,025. They sell at a price of $1,278.56, and the yield curve is flat. Assume that interest rates are expected to remain at their current level.

a. What is the best estimate of these bonds' remaining life?

b. If Lourdes plans to raise additional capital and wants to use debt financing, what coupon rate would it have to set in order to issue new bonds at par?

Reference no: EM132822350

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