(PLEASE READ THIS DIRECTION) Rules for Bond Valuation Problem Solving: a. For the "PV FACTOR in computing the PV of the coupon and PV for the maturity value/ principal use until 8-9th decimal place" before multiplying the coupon payment or future value. Example: ___x 2.123456789 or 22.12345678 b. For "COMPOUNDED RATES" include all decimals in the rate (do not round off). Example semi-annual: 13%/2 =0.065 c. For the "VALUE OF THE BOND/ PRICE OF THE BOND" round off your answers and final answers into whole numbers. Example: 824.59= 825

1. Your sister has been offered a 5-year bond with a P1,000 par value and a 7 percent coupon rate. This bond's interest is paid semi-annually. If your sister is to earn a nominal rate of return of 9 percent, compounded semi-annually, how much should she pay for the bond?