We are considering purchasing a 7% percent coupon bond (coupons paid semiannually) with 14 years remaining to maturity for 102-21 (priced in 32nds). We can re-invest the coupon payments at 4% percent, and we expect to sell the bond after a 3-year holding period for 106-16 (priced in 32nds).

1. The future value of the annuity from the re-invested coupons.

2. The holding period yield for the 3-year investment horizon.

3. Your recommendation as to whether the company should purchase the candidate bond if your required return is 6%.