The question:
Issued Bonds five years agao at 1,000 Dollars oer bond. These bonds had a 25 year life when issued and the annual interest payment was then 12%. The return was in line with the required returns by bondhoders at that point as Described:
Real Rate of return... 3%
Inflation Premium... 5
Risk Premium... 4
Total return... 12%

Assume that five years later the iflation premium is only 3% and is appropriatly reflected in the required return(or yield to maturity) of the bonds. The bonds have 20years remianing until maturity. Compute the new orice of the bond.

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Well, thanks for nothing, That is my question, How do I set this up, to work the math out.