Suppose you own a 30-year bond issued by Horseshoe Farm Equipment with a face value of $1,000 paying a semiannual coupon interest rate of 4% that has 15 years remaining until maturity. If interest rates in the general economy jump to 6% after one year, no one will want to buy your 4% bond for $1,000, because it pays only $ per year in interest. If you want to sell the bond, then the bond price will have to be If rates on similar bonds are now at 6%, then the discount rate is 6% (or 3% twice a year for 30 payments). The task is to calculate raised nt value of the interest payments and the repayment lump sum. To do so, use Appendix A-2 and Appendix A-4 in your textbook. Find the col lowered o interest and the row for 30 periods. (The number of periods, n, is equal to 30, because there are 30 semiannual interest payments in the remaining 15 years until the bond matures.) You can use the following equation to determine the value of a bond (or bond selling price): The Value of Bond (Bond Selling Price) Formula Value of Bond = Present Value of Interest Payments + Present Value of Lump Sum = (Annual Interest Payment/2 PVIFA,n) + (Lump Sum PVIFi,n) where: i n PVIFA i,n PFIFi,n = New annual interest rate divided by 2 (because interest payments are semiannual) Number of years to maturity times 2 (because interest payments are semiannual) = Present value interest factor of annuity (from Appendix A-4 in your textbook) Present value interest factor (from Appendix A-2 in your textbook) Use this equation to calculate the present value (selling price) of your $1,000 bond issued by Horseshoe Farm Equipment. The values of PVIFA and PVIF (from Appendix A-4 and Appendix A-2, respectively) have been provided for you. If required, round your answer to the nearest cent. Value of Bond = = = Present Value of Interest Payments + Present Value of Lump Sum (Annual Interest Payment/2 PVIFA 3%,30) + (Lump Sum PVIF3%,30) ($ ($ $ $ /2 x 19.6004) + ($ 19.6004) + ($ + $ 0.4120) 0.4120)