A bond of Visador Corporation pays $90 in annual interest, with a $1000 par value. The bonds mature in 25 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 13 percent or (ii) decreases to 6 percent?

c.Interpret your finding in parts a and b.