Suppose you purchase a ten-year bond with

12%

annual coupons.You hold the bond for four years and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was

11.11%

when you purchased and sold the bond,

a. What cash flows will you pay and receive from your investment in the bond per

$100

face value?

b. What is the internal rate of return of your investment?

Note:

Assume annual compounding.