Marko needs to raise capital through a zero-coupon bond debtoffering. If the bonds will have...

Marko needs to raise capital through a zero-coupon bond debt offering. If the bonds will have 12 years to maturity and the rate of return on a bond in Marko's risk class is 11 percent, what will be the selling price of the bond?

When i type this into a calculator

Expert Solution

N = 12 (number of years until maturity)

i = 11 (use 11, and not 0.11)

fv = -1000 (Face value of bond. This should be entered with a negative sign since we are calculating the PV of an amount receivable in the future)

pmt = 0

CPT ---> PV

PV is calculated to be $285.84

selling price of the bond will be $285.84

jeff jeffy answered 2 years ago

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