Bond X is noncallable, has 20 years to maturity, a 9 percent

annual coupon, and a $1,000 par value.

Your required return on Bond X is 10

percent, and if you buy it, you plan to hold it for 5 years.

You (and the market)

have expectations that in 5 years, the yield to maturity on a 15-year bond with

similar risk will be 8.5 percent.

How much should you be willing to pay for

Bond X today?

(Hint: You will need to know how much the bond will be

worth at the end of 5 years.)