AF Inc. issued a bond with an annual coupon rate of 10% with interest paid annually. The bond matures in 15 years. The par value of the bond is $1,000.
1) If your required return for this type of bond is 15%, what is the price you are willing to pay for the bond?
2) If your required return was 5%, what is the price you are willing to pay for the bond?
3) Compute the price at 15%, if the coupon interest is paid semiannually.
4) Compute the price at 5%, if the coupon interest is paid semiannually.