You are considering purchasing a bond at the end of this year. The bond has a coupon

Question:

You are considering purchasing a bond at the end of this year. The bond has a rate of 10.5 percent, interest payments are made annually, and the bond matures in 20 years. If your required pretax rate of return is 14 percent, what is the maximum price you would be willing to pay for a 20-year, 10.5 percent bond? Assume the bond pays interest annually.
Would you purchase the bond if its current market price is $750?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...