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You purchased a newly issued 7 % 4 0 - year $ 1 , 0 0 0 bond 8 years ago. The bond pays interest

You purchased a newly issued

7 % 40 -

year $

1, 000

bond

8

years ago. The bond pays interest each six months. You incur financial difficulties and are forced to sell the bond. You have just received the

16

th semiannual interest payment. The prevailing rate on similar bonds is

8.75 % .

What is your $

1, 000

bond worth today?

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