13-

A $1,000 face value bond issued by the Purdue Company currently pays total annual interest of $79 per year and has a 13-year life.

-What is the present value, or worth, of this bond if investors are willing to accept a 10 percent annual rate of return on bonds of similar quality if the bond is a Eurobond?

-How would your answer in (a) change if the bond is a U.S. bond?

-How would your answer in (b) change if, one year from now, investors only required a 6.5 percent annual rate of return on bond investments similar in quality to the Purdue bond?

-Suppose the original bond can be purchased for $925. What is the bonds yield to maturity?