You are considering this investment:

Bond that is selling in the market at $$1,200.$ The bond has a $$1,000$ par value, pays coupon

interest at $15$ percent, and is scheduled to mature in $10$ years. For bonds of this risk class,

you believe that a $12$ percent rate of return should be required.

a$.$ Calculate the value of the bond.

$(4$ marks$)$

b$.$ Should we buy the bond? Justify

$(3$ marks$)$