Betty and Bob buy a 20-year bond with a coupon rate of 7% per annum payable semiannually and a face and redemption value of $1000 and which is priced to yield 10% per annum compounded semiannually.

a. Algebraically compute the price using the General Formula

b. Algebraically compute the price using the Alternative Formula

c. Algebraically compute the price using the Makeham Formula. Your final answer should be correct to 3 places after the decimal point.

d. Check your result by using the Salesmans Rule to see if it gives a yield to maturity of approximately 10% per annum.

e. Find the Macaulay duration. Your final answer should be in years and correct to 2 places after the decimal point.

f. For extra credit check your work by using Excel to find the price and Macaulay duration.