SHOW YOUR WORK

Problem 1 (26 points):

Compute the value today of a 10-year $100,000 10% bond that pays interest every six months when the market demands a yield rate 12%. You must show your work.

Problem 2 (26 points):

Compute the value today of a 5-year $100,000 10% bond that pays interest annually when the market demands a yield rate 8%. You must show your work.