Callable bond. McCarty Manufacturing Company makes baseball equipment. The company decides to issue a callable bond that it expects to sell for $$730$ per bond. If the bond is a $20-$year semiannual bond with an annual coupon rate of $9\%$ and a current yield to maturity of $12\%,$ what is the option cost attached to the bond? Assume a $$1,000$ par value.

Hint: Find the price of an equivalent bond without the call option.

What is the price of the bond without the call option?