1) 7 years ago,  the bond's selling price is equal to par value so, the coupon rate is equal to market rate (6%).

We can calculate the current bond price by using the following formula in excel:-

=-pv(rate,nper,pmt,fv)

Here,

PV = Current bond price

Rate = 7%/2 = 3.5% (semiannual)

Nper = (25-7)*2 = 36 periods (semiannual)

Pmt = Coupon payment = $1,000*6%/2 = $30

FV = $1,000

Substituting the values in formula:

= -pv(3.5%,36,30,1000)

= $898.55

 

2) We can calculate the current price of bond by using the following formula in excel:-

=-pv(rate,nper,pmt,fv)

Here,

PV = Current price of bond

Rate = 10%

Nper = 20 periods

Pmt = Coupon payment = $1,000*8% = $80

FV = $1,000

Substituting the values in formula:

= -pv(10%,20,80,1000)

= $829.73

 

3) We can calculate the future value by using the following formula in excel:-

=fv(rate,nper,-pmt,pv,type)

Here,

FV = Future value

Rate = 5.12%

Nper = 10-2 = 8 periods

Pmt = $1,000

PV = $0

Substituting the values in formula:

= fv(5.12%,8,-1000,0,1)

= $10,079.47 

 

Working note:

EAR = (1+Rate/n)^n-1

= (1+5%/12)^12-1

= 1.0512 - 1

= 5.12%