What is the expected price of bond

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As an alternative to zero coupon bonds, Pacific Oil is considering the issuance of "deep discount" bonds. The bonds would have a 10-year maturity, $1,000 par value, and a 6% coupon rate even though the yield-to-maturity is expected to be 14%. Interest is paid annually. What is the expected price of each bond? In order to raise the needed $400,000,000, how large must the principal of the bond issue be?

Reference no: EM131082542

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