Question
BBB Co. needs to raise funds to finance a plant expansion, and it has decided to issue 15-year zero coupon bonds to raise the money.
BBB Co. needs to raise funds to finance a plant expansion, and it has decided to issue 15-year zero coupon bonds to raise the money. The required return on the bonds will be 8%. What price will the bond be sold for at issuance if the face value of the bond is $1,000? A) $1000 B) $315.24 C) $630.48 D) $1100 BBB Co. needs to raise funds to finance a plant expansion, and it has decided to issue 15-year coupon bonds to raise the money, in which the coupon rate is at 1%. The required return on the bonds will be 8%. What price will the bond be sold for at issuance if the face value of the bond is $1,000? A) The price is greater than $315.24 B) The price is lower than $315.24 C) The price is exactly at $630.48 D) The price is at $1000
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