Microeconomics 6th Edition by Robert Hall, Shirley Kuiper, Marc Lieberman

Exercise 12

Suppose a risk-free bond has a face value of $100,000 with a maturity date three years from now. The bond also gives coupon payments of $5,000 at the end of each of the next three years. What will this bond sell for if the annual interest rate for risk-free lending in the economy is
a. 5 percent?
b. 10 percent?