Arizona Public Utilities issued a bond that pays $70 in interest, with a $1000 par value. It matures in 25 years. The market's required yield to maturity on a comparable-risk bond is 8%.

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 12 percent or (ii) decreases to 7%?

C. Explain the implications of your answers in part b as they relate to interest-rate risk, premium bonds, and discount bonds.

D. Assume that the bond matures in 15 years instead of 25 years. REcompute your answers in a and b.

E. Explain the implications of your answers in part d as they relate to interest-rate risk, premium bonds, and discount bonds.