Cemex, a Mexican multinational building materials company, issued a bond with a \($1,000\) par value that pays \($60\) in annual interest. It matures in 30 years. Your required rate of return is 4 percent.

a. Calculate the value of the bond.

b. How does the value change if your required rate of return

(1) increases to 8 percent or (2) decreases to 3 percent?

c. Explain the implications of your answers in part (b) as they relate to interest rate risk, premium bonds, and discount bonds.

d. Assume that the bond matures in 18 years instead of 30 years. Recompute your answers in part (b).

e. Explain the implications of your answers in part (d) as they relate to interest rate, premium bonds, and discount bonds.