Question

Find the face value of the zero-coupon bond. 18-year bond at 5.4%; price $9000 The face value will be $ (Do not round until the final answer. Then round to the nearest dollar as needed.)

Answer 1

The face value of the zero-coupon bond is $3,827.

Step-by-step explanation:

The face value of a zero-coupon bond can be calculated using the formula:

Face Value = Price / ((1 + Interest Rate)Years)

In this case, the bond has a price of $9,000. We know that the bond has a maturity period of 18 years and an interest rate of 5.4%.

So, the face value of the bond will be:

Face Value = $9,000 / ((1 + 0.054)18)

Calculating this, we get a face value of approximately $3,827.34. Rounding this to the nearest dollar, the face value will be $3,827.