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| Teaching Since: | May 2017 |
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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Zero Coupon Bonds
e5A. The state of Idaho needs to raise $50,000,000 for highway repairs. Officials are considering issuing zero coupon bonds, which do not require periodic interest pay- ments. The current market interest rate for the bonds is 10 percent. What face value of
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bonds must be issued to raise the needed funds, assuming the bonds will be due in 30 years and compounded annually? How would your answer change if the bonds were due in 50 years? How would both answers change if the market interest rate were 8 percent instead of 10 percent?
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