Problem 3. David borrows an amount at an annual effective interest rate of 7.25% and will repay all interest and principal in a lump sum at the end of 12 years. He uses the amount borrowed to purchase a 10-year semiannual coupon bond with face amount of $1,000. The bond has a nominal coupon rate of 10% and a nominal yield to maturity of 8% both convertible semiannually. All coupon payments and the redemption amount are reinvested at an annual effective interest rate of 6%. The redemption amount is paid at the end of the maturity date. Calculate the redemption amount needed such that David is just able to repay the loan.