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jolli1 [7]
3 years ago
7

the Bailey Brothers want to issue 20-year , zero coupon bonds that yield 9% .what price should it charge for these bonds if the

face value is $1000?​
Business
1 answer:
prohojiy [21]3 years ago
6 0

Answer:

the amount charged is $178.43

Explanation:

The computation of the price charged is  shown below:

As we know that

Future value = Present value × (1 + rate)^number of years

So,

Present value = Future value ÷ (1 + rate)^no of years

= $1,000 ÷ (1 + 0.09)^20

= $1,000 ÷ 1.09^20

= $178.43

Hence, the amount charged is $178.43

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