17. A zero-coupon bond is a bond that is sold now at a discount and will pay its face value at the time when it matures; no interest payments are made. A zero-coupon bond can be redeemed in 20 years for $10,000. How much should you be willing to pay for it now if you want the following returns? (a) 4% compounded monthly (b) 4% compounded continuously (a) For a return of 4% compounded monthly, you should pay $ (Round to the nearest cent as needed.) (b) For a return of 4% compounded continuously, you should pay $ (Round to the nearest cent as needed.)

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A: Formula: EVA = Net Operating profit margin(NOPAT) -(Capital employed* WACC)

Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.