1. A fourteen-year bond, with par value equals $1,000, pays 10% annually. If similar bonds are currently yielding 8% annually, what is the market value of the bond? Use semi-annual analysis.
2. Buchanan Corp. is refunding $10 million worth of 10% debt. The new bonds will be issued for 7%. The corporation's tax rate is 32%. The call premium is 9%. What is the net cost of the call premium?