Reference no: EM132473989

A $1000-face-value bond issued by Dire Wolf Co. currently matures in 18 years, pays annual coupon payments at a coupon rate of 9%, and has a required return of 10% (per year).

(a) Calculate a fair price for this bond today.

(b) If you believe that, 3 years from now, the appropriate required return will still be10%, calculate what the price should be 3 years from now.

(c) If you believe that, 12 years from now, the appropriate required return will be still be 10%, calculate what the price should be 12 years from now.

(d) If instead you believe that, 12 years from now, the appropriate required return will be 18%, calculate what the price should be 12 years from now.