For example, assume Jackson wants to earn a return of 8.75% and is offered the opportunity to purchase a $1,000 par value bond that pays a 10.00% coupon rate (distributed semiannually) with three years remaining to maturity. The following formula can be used to compute the bond's intrinsic value Intrinsie Value - voc o . c om Complete the following table by identifying the appropriate corresponding variables used in the equation ble Value Unknown Variable Name Bond's semiannual coupon payment Bond's par value $1,000 Semiannual required return 4.3750 reasonable to expect that Jackson's potential bond investment is currently exhibiting an intrinsic Based on this equation and the data, it is value less than $1,000 Now, consider the situation in which Jackson wants to earn a return of 13%, but the bond being considered for purchase offers a coupon rate of 10.00%. Again, assume that the bond pays semiannual interest payments and has three years to maturity. If you round the band's intrinsk value to the nearest whole dollar, then its intrinsic value of crounded to the nearest whole dollar) is its par value, so that the bond is