Question #1. [5 points]. A major manufacturer is reevaluating its bonds since it is planning to issue a new bond in the current market. The firm's outstanding bond issue has 7 years remaining till maturity. The bonds were issued with an 8 percent coupon rate (paid quarterly) and a par value of $1,000. The required rate of return is 10 percent.

a) Refer to the above Exhibit. What is the current value of these securities?

b) Refer to the above Exhibit. What will be the value of these securities in one year if the required return is 6 percent?