Please assist in answering the following problems. Provide step by step calculations.
Problem: A 20-year, $1,000 par value zero-coupon rate bond is to be issued to yield 11 percent
Q1. What should be the initial price of the bond? (Take the present value of 1000 for 20 years, using Appendix B at the back of the text.)
Q2. If immediately upon issue, interest rates dropped to 9 percent, what would be the value of the zero-coupon rate bond?
Q3. If immediately upon issue, interest rates increased to 13 percent, what would be the value of the zero-coupon rate bond?