ABC company issued a 3 year bond at $1000 face value and a 5% coupon rate, with coupons paid once a year at the end of every year. It is now the beginning is 2 year in the 1^st coupon has already been paid. Banks are now giving 4% interest for deposits. The bond's market value is $913.

Please explain thoroughly. Is there a formula required?

1) How do you compute the bond's fair value?