Question

Mann Corporations $1,000.00 par value zero-coupon debenture matures in 30 years. If they are priced to return 11.50% to the investor what is the market price of one Mann Corporation Zero coupon debenture

Answer 1

Zero-cupon bond= $38.17

Step-by-step explanation:

Giving the following information:

Mann Corporations $1,000.00 par value zero-coupon debenture matures in 30 years.

Rate of return= 0.115

To calculate the price of the zero-cupon bond, we need to use the following formula:

Zero-cupon bond= [face value/(1+i)^n]

Zero-cupon bond= [1,000/(1.115^30)

Zero-cupon bond=$38.17