Question: A bond with a $1,000 face value and a 9 percent annual coupon pays interest annually. The bond matures in 12 years. Determine the value

A bond with a $1,000 face value and a 9 percent annual coupon pays interest annually. The bond matures in 12 years.
1. Determine the value of the bond to a friend of yours with a required rate of return of 11%.

b. A zero-coupon bond with similar risk is selling for $300. The bond has a face value of $1,000 and matures in 12 years. Your friend asks you which bond she should invest in, the zero-coupon bond or the bond in part (a). Which bond do you recommend, and why? Assume the market price of the bond in part (a) is $720.

2. Jackson Corp $1,000 par value bonds currently sell for $856.92. The coupon rate is 8 percent, paid semi-annually. If the bonds have 8 years before maturity, what is the yield to maturity on the bonds?

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