Consider a corporation who recently filed Chapter 11 bankruptcy (reorganization). Under the reorganization, the company has been allowed to reorganize their debt structure with a consolidated new bond issue with more favorable terms.

The new issue will be a 30-year, 9% coupon rate bond with semiannual coupons. However, under the new indenture, the company is relieved of making interest payments for the first 10 years. For the remaining 20 years, the regular interest payments would resume. The indenture calls for the deferred interest to be paid in two equal installments: one at the end of year 20, and one at maturity. Each bond has a $1,000 par value.

Assuming a yield to maturity of 7%, the value of a new $1,000 par value bond is closest to:

A

$609.88.

B

$780.66.

C	$1,213.55.

D	$1,384.33.