Assume a $1,000 face value bond has a coupon rate of 8.7 percent paid semiannually and has an eight-year life.

(a)

If investors are willing to accept a 10.7 percent rate of return on bonds of similar quality, what is the present value or worth of this bond? (Round final answer to nearest dollar amount.)

Present value

$

(b)

What is the value of the bond if investors wanted an 8.2-percent rate of return? (Round final answer to nearest dollar amount.)

Bond value

$