You are considering buying a zero-coupon bond from Big Bend Corporation. The face value (or par)...

You are considering buying a zero-coupon bond from Big Bend Corporation. The face value (or par) of the bond is $10,000, and it matures in 6 years. Assume that the appropriate discount rate is 7.26% per year with annual compounding. Given this discount rate, what is the corresponding price today of this bond? Enter your answer in dollars and cents; round to the penny.

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Expert Solution

In the case of annual compounding at the end of Every year, interest needs to be capitalized. It means interest should be added to the principal amount.

jeff jeffy answered 2 years ago

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