Both a/b

4. A bond with a face value of $40,000 pays annual interest of 3.5% at the end of each year for 10 years. Eight payments are left until the bond matures with the first payment being today. (a) Draw a cash flow diagram of the bond and draw a vertical line that represents today on the cash flow diagram. (3 marks) (b) How much would you pay for the bond today if you wanted to earn 6.5% annual interest compounded annually