Bond value and changing required returns Midland Utilities has a bond issue outstanding that will mature to its $1,000 par value in 14 years. The bond has a coupon interest rate of 14% and pays interest annually. a. (1) The value of the bond, if the required return is 14%, is $. (Round to the nearest cent.) (2) The value of the bond, if the required return is 18%, is $ (Round to the nearest cent.) (3) The value of the bond, if the required return is 11%, is $ (Round to the nearest cent.) b. Use your finding in part a and the graph here, , to answer the following questions: (Select from the drop-down menus.) When the required return is less than the coupon rate, the market value is the par value. When the required return is equal to the coupon rate, the market value is the par value. When the required return is greater than the coupon rate, the market value is the par value. c. What two possible reasons could cause the required return to differ from the coupon interest rate? (Select the best answer below.) A. Firm's risk has changed. B. Tax rate has changed. C. Bond contract has changed. D. Cost of funds has changed. - Graph/Chart 1,500 1,400- 1,300- 1,200 1,100- 1,000 Bond Value ($) 900- 800- 700- 600- 500 11 18 12 13 14 15 16 17 Required return (%)