(b) HUS Enterprises would like to raise $40 million to invest in capital expenditures. The company plans to issue 10 -year bonds for this purpose. The company is evaluating two issue alternatives: a bond paying coupons annually and a zero coupon bond. Both bonds will have a par value of $1,000. The company also believes it can get a rating of AA from Standard \& Poor's. The 10-year U.S. Treasury bond has a yield to maturity of 6.5% and the yield spread on 10-year AA-rated corporate bonds is 0.4%. i. What coupon rate should the company set on its new coupon bonds if it wants them to sell at par? ( 2 marks) ii. What is the issue price of zero coupon bond