Bond value and

timeConstant

required returnsPecos Manufacturing has just issued a

15-year,

13%

coupon interest rate,

$1,000-par

bond that pays interest annually.The required return is currently

17%,

and the company is certain it will remain at

17%

until the bond matures in

15

years. a.Assuming that the required return does remain at

17%

until maturity, find the value of the bond with (1)

15

years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, (6) 1 year to maturity.b.All else equal, when the required return differs from the coupon rate and is constant to maturity, what happens to the bond value as time passes? Explain in light of the following graph:

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Question content area bottom

Part 1

a. (1) The value of the bond with

15

years to maturity is

(Round to the nearest cent.)