Investor A has just sold a ten-year $10,000 corporate bond to Investor B for $8,500. Investor A purchased the bond four years ago for $9,500. The bond coupon rate is 8 percent per year paid annually and Investor A has just received the dividend for year 4.

a) Draw the cash flow diagram for Investor A

b) Calculate the Rate of Return for Investor A

c) Draw the cash flow diagram for Investor B

d) Investor B has a MARR of 10% per year compounded semi-annually. Will the return on the corporate bond meet the Investor Bs MARR?

Please do not use excel.