(Bond valuation)

Hamilton, Inc. bonds have a coupon rate of 14%. The interest is paid semiannually, and the bonds mature in 5 years. Their par value is $1,000.

If your required rate of return is 11%, what is the value of the bond? What is the value if the interest is paid annually?

a. If the interest is paid semiannually, the value of the bond is

$_________

(Round to the nearest cent.)

b. If the interest is paid annually, the value of the bond is

$________

(Round to the nearest cent.)