You purchased a $10,000 face value commercial bond for $9,000 on June 1,2001. The bond pays $500 interest at the end of each six months. It is now June 1, 2002. Thus, you have already received two $500 payments. The bond matures in five more years on May 31, 2007.

(a) What is the bond (or coupon) interest rate?

(b) What return (effective interest rate) are you earning on your bond?

(c) What is the bond worth today, if 8% is an acceptable value for MARR?