RG Coffee House issued a $1,000 par value bond that pays a 9 percent interest annually. The bond matures in 14 years and is currently selling at $1,120. Your required rate of return is 8.5 percent.

**a. **Compute the bond’s expected rate of return.

**b. **Determine the value of the bond to you, given your required rate of return.

**c.** Should you purchase the bond? Why?