1. You are considering the purchase of an annual bond that matures in 10 years. The rate on the bond (coupon) is 8.75% and the current market rate is 8%. How much is the bond worth? You are considering the purchase of a bond that matures in 12 years. The bond pays semi-annual interest at 5.75% and the current market rate is 3%. How much is the bond worth? 2. 3. Why do we use the OVERALL COST OF CAPITAL for the investment decisions even when only one source of capital will be used? (For example, we may be able to finance the entire project using low-cost debt, so why do we need to use the overall cost of capital in analyzing whether or not to accept the project?) blue2 4. In computing the cost of capital, do we use the historical costs of existing debt and equity or the current cost as determined in the market? Why? 5. Why is the cost of debt less than the cost of preferred stock if both securities are prices to yield 10 percent in the market