A bond of Visador Corporation pays $80 in annual interest, with a $1000 par value. The bonds mature in 19 years. The market's required yield to maturity on a comparable-risk bond is 8.5 percent.

a.Calculate the value of the bond.

b.How does the value change if the market's required yield to maturity on a comparable-risk bond (i) increases to 11 percent or (ii) decreases to 5 percent?

c.Interpret your finding in parts a and b.