Please solve the following
(Bond valuation) The 8-year $1,000 par bonds of Vail Inc. pay 12 percent interest. The market’s required yield to maturity on a comparable-risk bond is 7 percent. The current market price for the bond is $1,130.
- What is your yield to maturity on the Vail bonds given the current market price of the bonds? (Round to two decimal places.)
- What should be the value of the Vail bonds given the yield to maturity on a comparable risk bond? (Round to the nearest cent.)
- Should you purchase the bond at the current market price?