Question: Bond value and time - Constant required returns Pecos Manulachuring has just issued a 15-year, 9% coupon interest rate, $1,000-par bond hat pays interest annuariy.

Bond value and time - Constant required returns Pecos Manulachuring has just issued a 15-year, 9% coupon interest rate, $1,000-par bond hat pays interest annuariy. Fhe required retum is cumently 17%, and the company is certain 1 will remain at 17% until the bond matures in 15 years. a. Assuming that the required return does remain at 17% unt maturhy, find the value of the bend wh (1) 15 years, (2) 12 yoars, (3) 9 years, (4) 6 years, (5) 3 years, (6) 1 yoar fo maturity b. Al else equal, when the required return diflers from the coupon rate and is constant to maturity, what happens to the bond value as time passes? Explain in light of the following graph a. (1) The value of the bond with 15 years to maturity is : (Round to the rearest cent)

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