Question: Five years ago, Zapada International issued $50 million of 10 percent, 25-year debentures at a price of $990 p

[answerhappygod]

Question:
Five years ago, Zapada International issued $50 million of 10percent, 25-year debentures at a price of $990 per bond to thepublic. The call price was originally $1,100 per bond the firstyear after issuance, and this price declined by $10 each subsequentyear. Zapada is now “calling” the bonds in order to refund them ata lower interest rate.
a. Ignoring taxes, what is a bondholder’s return on investmentfor the 5 years? (Assume that interest is paid once a year and thatthe investor owns one bond.)
b. If the bondholder can now invest $1,000 in a 20-year securityof equivalent risk that provides 8 percent interest, what is theoverall return over the 25-year holding period? How does thiscompare with the return on the Zapada bonds had they not beencalled? (Assume again that interest is paid once a year. Both ratesof return can be approximated using the present value tables at theend of the book.)
please proper explain and do not copy from answers. Otherwise Ihave to report the answer.