Suppose a corporation issues a two-period, 9% coupon bond with the face value of the issue worth $9 million. Suppose the issue has a sinking fund obligation requiring the company to sink $3 million in period 1, with the company having the option to either buy the bonds in the market or call them at CP = 99 per

$100 face value. Using the same interest rate tree you generated in Question 1, calculate the value of the sinking fund bond.