Please answer A & B

According to the figure below, as a bond approaches maturity the premium (or discount) reduces to zero. Prove this by calculating the sales price with 7, 5, and 2 years remaining to maturity for the following two bonds. Assume a constant yield to maturity of 7 percent. a. A 10-year, 11 percent annual coupon bond. b. A 10-year, 6 percent annual coupon bond. Click on the table icon to view the PVIF table Click on the table icon to view the PVIFA table $1,200 $1,117 Bond value when required rate of retum = 9% (premium bond) $1,053 $1,100 Maturity Bond value when required rate of return = 12% $1,000 3 a. The sales price, PV, of a 10-year, 11 percent annual coupon bond, a yield to maturity of 7 percent and with 7 years remaining to maturity is $ (Round to the nearest cent.) i X i Data Table Data Table 6% 10% n 6% 10% 2 2 0.890 0.747 Compound Sum of $1 (PVIF) 7% 8% 9% 0.873 0.857 0.842 0.713 0.681 0.650 0.623 0.583 0.547 0.508 0.463 0.422 5 Compound Sum of $1 (PVIFA) 7% 8% 9% 1.808 1.783 1.759 4.100 3.993 3.890 5.389 5.206 5.033 7.024 6.710 6.418 0.826 0.621 0.513 0.386 5 1.833 4.212 5.582 7.360 1.736 3.791 4.868 6.145 7 0.665 7 10 10 0.558 Print Done Print Done $1,200 $1,117 Bond value when required rate of return = 9% (premium bond) $1,053 $1,100 Maturity Bond value when required rate of return = 12% $1,000 Marlet Value $951 $900 $899 Bond value when required rate of retum = 15% (discount bond) $800 5 4 3 2 Years Left to Maturity