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?Pecos Manufacturing has just issued a 15?-year, 12?% coupon interest? rate, ?$1 comma 000?-par bond...

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Accounting

?Pecos Manufacturing has just issued a 15?-year, 12?% coupon interest? rate, ?$1 comma 000?-par bond that pays interest annually.??The required return is currently 11?%, and the company is certain it will remain at 11?% until the bond matures in 15 years.

a.??Assuming that the required return does remain at 11?% until? maturity, find the value of the bond with? (1) 15 ?years, (2) 12? years, (3) 9? years, (4) 6? years, (5) 3? years, (6) 1 year to maturity.

b.??All else remaining the? same, when the required return differs from the coupon interest rate and is assumed to be constant to? maturity, what happens to the bond value as time moves toward? maturity? Explain in light of the following? graph

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