answers for 36 & 37

36. Some bonds, referred to as zero-coupon bonds, pay no periodic interest; instead the bondholder buys the bond at a discount and receives the maturity value on the maturity date. In effect, interest is received in one lump-sum when the bond matures. Suppose a corporation issues 25 year $1,000 zero coupon bonds. Calculate the price you must pay for one of these bonds based on earning a 7% annual rate. 37. You rent an apartment for $850 a month and offer to prepay 12 months' rent. If the landlord can earn 8.4% compounded monthly, what amount should the landlord accept? (Remember, rent is always paid in advance, at the beginning of each month.)