The bonds issued by the corporation have a face value of $1000 and the coupon rate is 16% payable semi-annually. The coupons mature after a period of 10 years.

The present value of an amount A due after n years if the expected rate of return is r is given by A/(1 + r)^n

For a required rate of return is 16.64%, the present value of the bond's cash flows can be calculated as follows. The semiannual rate of return is 8.32%. The face value $1000 is due after 20 periods and $80 are due for 10 years after 6 months. The present value of the cash flows which is the sum of the all the cash flows discounted appropriately is:

1000/(1.0832)^20 + 80/(1.0832)^20 + 80/(1.0832)^19 +...80/(1.0832)^1 = $969.31

If the required rate of return is 12.36%, the present value of the cash flows is:

1000/(1.0618)^20 + 80/(1.0618)^20 + 80/(1.0618)^19 +...80/(1.0618)^1 = $1205.02

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