PLEASE SHOW WORK STEP BY STEP THAN YOU

17. An asset promises to pay the following:

• $60 each year for the next ten years: and
• $1,000 in ten years

Assume all the cash flows are discounted by 6%. Use the annuity formula to get the price of the first part. Use the standard discounting formula to get the price of the second part. Add them together. This is a bond! It is described as paying a coupon rate of 60/1,000 = 6% (a coupon of 60), with a face value of 1,000 and a maturity of ten years. And its yield-to-maturity is 6%.

18/Optional. The previous question showed that combining an annuity (coupon) with a single cash flow (face value) produces a bond. Doing so gives the bond price formula:

P = coupon/yield + (face value coupon/yield) / (1 + yield)^maturity.

1. Using this formula, calculate the price of a 20-year maturity bond, face value 100 and coupon 5 for yield-to-maturity 4%, 5% & 6%
2. Now perform a) for a 30-year bond with same coupon and face value.