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A bond very recently purchased for $9,000 has a face value of $10,000 and a bond...

A bond very recently purchased for $9,000 has a face value of $10,000 and a bond interest rate of 10% per year payable semiannually. The bond is due (matures) in 3 years. The company that

issued the bond is contemplating a liquidity problem in 3 years and has just advised all bondholders that if they will keep their bonds for an additional 2 years past the original due date, the bond interest rate for the additional two years will be 16% payable semiannually.

(a) What effective rate of return per year would the bondholder receive if he held the bond for the additional two years?

(b) What is the market value for the bond if the required market rate of return on such bonds is 10%? Ignore the impacts of taxation.

COULD YOU PLEASE SHOW how to do this on EXCEL? Thank you!!!

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