Bonaqua Alison Corporation Limited is planning to issue 20-year bonds with a face value of $1,000. The current market rate for similar bonds is 4.5%. Assume that coupon payments will be semi-annual. The company is trying to decide between issuing a 5% coupon bond or a zero coupon bond. The company needs to raise $1.5 million.

a. What will be the price of the 5% coupon bonds?

b. How many coupon bonds would have to be issued?

c. Is the bond selling at a discount and why?

d. What will be the price of the zero coupon bonds?