Problem $10-12($Algo$)$ Bond value $[$L$010-3]$

Jim Busby calls his broker to inquire about purchasing a bond of Disk Storage Systems. His broker

quotes a price of $$1,160.$ Jim is concerned that the bond might be overpriced based on the facts involved.

The $$1,000$ par value bond pays $14$ percent interest, and it has $17$ years remaining until maturity. The

current yield to maturity on similar bonds is $12$ percent.

a$.$ Calculate the new price of the bond. Use $Appendi{x}_B$ and $Appendi{x}_D$ for an approximate answer but

calculate your final answer using the formula and financial calculator methods.

Note: Do not round intermediate calculations. Round your final answer to $2$ decimal places.

Assume interest payments are annual.

New price of the bond

b$.$ Do you think the bond is overpriced?

No

Yes