Question

Arts and Crafts Warehouse wants to issue 15-year, zero-coupon bonds that yield 7.5 percent. What price should it charge for these bonds if the face value is $1,000? Assume semiannual compounding.

Answer 1

`PV=(1,000)/(1+(.075)/(2)^(2*15) ) =331.40`

They should charge $331.40 for these bonds if the face value is $1,000.