Posted by **eric** on Saturday, September 22, 2012 at 6:49pm.

Assume that you are considering the purchase of a 30-year, noncallable bond with an annual coupon rate of 8.5%. The bond has a face value of $1,000, and it makes semiannual interest payments. If you require an 7.4% yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?