The disclosure note stated the debenture bonds were issued late in 2013 and have a maturity value of $630 million. The maturity value indicates the amount that White & Decker will pay bondholders in 2033. Each individual bond has a maturity value (face amount) of $1,130. Zero-coupon bonds pay no cash interest during the term to maturity. The company is accreting (gradually increasing) the issue price to maturity value using the bonds' effective interest rate computed on an annual basis.

Required: 1. Determine the effective interest rate on the bonds. 2. Determine the issue price in late 2013 of a single, $1,130 maturity-value bond. (For all requirements, round your answers to 2 decimal places.)

1. effective interest rate

2. issue price