Problem:
Assume that you are considering the purchase of a 20-year, non-callable bond with an annual coupon rate of 9.5%. The bond has a face value of $1000, and it makes semiannual interest payments.
Required:
Question: If you require an 8.4% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?
Note: Show supporting computations in good form.