Problem 3: Valuing Bonds [5 Points] Suppose that you are considering buying a Bond. The current interest rate is 5% per annum. This bond matures four years from now (t = 4), at which point it will pay out $10,000. This bond also pays annual coupon payments of $1,000 every year until maturity (and including maturity), beginning next year (t = 1). So, there are four coupon payments, each year, beginning at t = 1 and ending at t = 4. 14. What is the Present Value (PV) of this bond? What would we expect to be the market price for this bond? [2 points] 15. If you are buying this bond, are you a lender or a borrower? Explain your answer in your own words. [1 point] Suppose now that the interest rate increases to 10%. 16. What is the new market price for this bond after this interest rate increase? Does this interest rate increase make this bond more or less valuable? [2 points]