a.) An annual bond has a face value of $1000, pays an annual coupon of $75 and has a remaining maturity of 17 years. Suppose the discount rate (required rate of return) of this bond is 6.51%. What is the intrinsic price of this bond?

b.) Suppose the price at which the bond is trading is $1025. Do you want to buy it? Sell it?

c.) Suppose the issuer of this bond is in financial distress because of a pandemic. The bond issuer negotiates with the investors that coupon payment for the next 5 years be set to zero. The skipped payments would be made up in years 6 -10 with an additional coupon payment of $15 per year to compensate bond investors. Thus, investors would receive the normal coupon of $75 plus the skipped coupon of $75 plus a compensation payment of $15 per year during years 6-10. The normal schedule of payments would be resumed after year 10. To account for higher default risk, the required rate of return (discount rate) on the bond rises to 13.76%. What is the intrinsic value of the bond given the new circumstances?