Zero Coupon Bonds The state of Illinois issues zero coupon bonds as part of its Illinois College Savings Bonds series. In late 2002, the state issued 9 million such bonds with a total $45 million maturity value. Each bond had a maturity value of $5,000, and bonds ranged in price from $4,750 for a 3-year bond to $1,800 for a 22-year bond. Consider one of the 22-year zero coupon bonds issues on October 1, 2002 for $1,800. 1. Compute the market interest rates for the 22-year zero coupon bond. How does this compare with the rate on the 3-year bonds? 2. Prepare the state of Illinois' journal entry for one 22-year bond at issuance. Do not use a discount account. 3. Prepare the state's journal entry for recording interest expense on the 22-year bonds for 2002. Round to the nearest dollar. Remember that the bond was outstanding only 3 months in 2002. 4. Compute the liability that Illinois would show on its balance sheet for this bond on December 31, 2002.