1. Eight years after the original issue (#1 above) with 4 years remaining, President Sanders realizes the nationalization of banks by the federal government was not such a good idea, now that China will not lend any more money to the government. Since the country is so much in debt, and everything is free, the market rate of interest is now 12%. Ms. Zhou offers to purchase this bond.

1. Will Ms. Zhou pay a premium or discount to the original offering and a premium of discount to the secondary offering price?

2. What will be the price and the proceeds?