For example, assume Jackson wants to earn a return of $7\mathrm{.}00\%$ and is offered the opportunity to purchase a $$1,000$ par value bond that pays a $7\mathrm{.}00\%$ coupon rate $($distributed semiannually$)$ with three years remaining to maturity. The following formula can be used to compute the bond$$s intrinsic value:

Intrinsic Value

$=$

A$(1+$C$)1+$A$(1+$C$)2+$A$(1+$C$)3+$A$(1+$C$)4+$A$(1+$C$)5+$A$(1+$C$)6+$B$(1+$C$)6$

Complete the following table by identifying the appropriate corresponding variables used in the equation.

Unknown

Variable Name

Variable Value

A Bond$$s semiannual coupon payment

B $$1,000$

C Semiannual required return