Your company wants to raise $8.5 million by issuing 10-year zero-coupon bonds. If the yield to maturity on the bonds will be 5% (annual compounded APR), what total face value amount of bonds must you issue? The total face value amount of bonds that you must issue is $ (Round to the nearest cent.)

Your company wants to raise $8.5 million by issuing 10-year zero-coupon bonds. If the yield to maturity on the bonds will be 5% (annual compounded APR), what total face value amount of bonds must you issue? The total face value amount of bonds that you must issue is $ (Round to the nearest cent.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Your company wants to raise $8.5 million by issuing 10-year zero-coupon bonds. If the yield to maturity on the bonds will be 5% (annual compounded
APR), what total face value amount of bonds must you issue?
The total face value amount of bonds that you must issue is $. (Round to the nearest cent.)
View an example Get more help.
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Expert Solution

Step 1

A zero coupon bond is a debt security instrument that does not pay interest.it is traded at deep discounts offering full face value profits at maturity.

The difference between the purchase price of bond and the par value indicates the investor' return.

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