Use this equation to calculate the present value $($selling price$)$ of your $$1,000$ bond issued by Horseshoe Farm Equipment. The values of PVIFA and

PVIF $($from Appendix A$-4$ and Appendix A$-2,$ respectively$)$ have been provided for you. If required, round your answer to the nearest cent.

Now suppose that the interest rate has fallen instead of risen. If the interest rate falls below the coupon rate $($stated interest rate$)$ of your bond, then

the price of your bond would $"$ the bond's face value. This is because investors are willing to pay more to own a bond that offers a

yield that is higher than the current interest rate. The difference between a bond's face value and its higher selling price is called a