Suppose a friend of yours invested in an outstanding bond with Bobcat Bakery. The bond has an annual coupon rate of 7%, a remaining maturity of 17 years, and a $1,000 par value. The market interest rate is currently 5%. In order to use a financial calculator to compute how much your friend paid for the bond, you will need to know the following information: Compute the amount of interest paid each year by completing the following math derivation. Select this same value from the "pmT" drop down menu found in the following financial calculator table. Amount of Interest = Ooupon Rate Far Value == Next, enter the number of years before the bond matures into the " N " cell of the following financial calculator table. Remember that the going rate of interest is what determines the market price of a bond. Therefore, this is the value that you would need to enter into your financial calculator. Enter the market interest rate into the " I/ cell of the following financial calculator table. Using a financial calculator, compute the present value of the cash flows this asset is expected to produce. Enter this value into the final row of the following table. Note: Make sure your calculator is set to END mode. The absolute value of the present value your calculator computed is the market price of the bond. Because the market price is the par value, your friend purchased a bond. Now it's time for you to practice what you've learned. Jacques is deciding which two bonds he wants to invest in. Bond A has 23 years remaining to maturity, and the coupon interest rate is 11% per year. Bond B has 20 years to maturity, and the coupon interest rate is 14% per year. Both bonds have a $1,000 par value and the yield to maturity is 10%. Complete by the following table by using a financial calculator to determine the market price for each bond and whether the bond is a oremium, discount, or par bond