A) Herrera purchased a 10-year, 1,000 par value bond. The coupon rate on this bond is 7 percent annually, with interest being paid every six months. If Herrera expects to earn a 9 percent simple rate of return on this bond, what is the maximum amount that he should pay for it?

B) Recently, Mandu Hazan Inc. filed for bankruptcy and the court permitted a new indenture on an outstanding bond issue of face value 1,000 to be put into effect. The issue has 15 years to maturity and a coupon rate of 10 percent, paid annually. The new agreement allows the firm to pay no interest for five years. Then, interest payments will be resumed for the next 10 years. However, at maturity, the principal plus the interest that was not paid during the first five years will be paid. However, no interest will be paid on the deferred interest. If the required return is 15 percent, what should the bonds sell for in the market today?