2. (20 points) Three years ago, PurpX issued 10,000 bonds with the following specifications: 10-year bond with 10% coupon rate and $1000 face value. PurpX made its third coupon payment today with 7 more coupon payments as well as the face value left to be paid. The current market rate is 6%. One board member suggests to take advantage of the low rates and purchase back all the bonds to reissue them at 6% coupon rate. a) How much does PurpX need today to purchase back all of its bonds? b) How many new 7-year, 6%-coupon, $1,000-face-value bond does PurpX need to issue to finance this purchase? c) Would you be supporting the board member who makes this suggestion? Why or why not? 2. (20 points) Three years ago, PurpX issued 10,000 bonds with the following specifications: 10-year bond with 10% coupon rate and $1000 face value. PurpX made its third coupon payment today with 7 more coupon payments as well as the face value left to be paid. The current market rate is 6%. One board member suggests to take advantage of the low rates and purchase back all the bonds to reissue them at 6% coupon rate. a) How much does PurpX need today to purchase back all of its bonds? b) How many new 7-year, 6%-coupon, $1,000-face-value bond does PurpX need to issue to finance this purchase? c) Would you be supporting the board member who makes this suggestion? Why or why not