Consider a bond paying a coupon rate of 10% per year, compounded annually. Assume that the market interest rate (YTM or return on investments of like risk) is 15% per year. In other words you want a 15% return on the bond. The bond has three years until maturity. The par value is $1,000. Assume that you buy the bond today for $885.84.

21) What is the cash flow (interest only) that you want to receive each year (yr 1, yr 2, and yr 3) based on the 15% return?

1. $132.88
2. $150
3. $88.58
4. $100
5. None of above