Lend Lease Corporation Ltd is planning to issue 10-year bonds with a face value of $1000. The going market rate for such bonds is 8.125 per cent. Assume that coupon payments will be semi-annual. The company is trying to decide between issuing an 8 per cent coupon bond or a zero-coupon bond. The company needs to raise $1 million.

A) What will be the price of the 8 per cent coupon bonds?

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B) How many coupon bonds would have to be issued?

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C) What will be the price of the zero-coupon bonds?

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D) How many zero-coupon bonds will have to be issued?

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