What is the implicit interest for this bond in year

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Reference no: EM13937357

Lee Michaels Jewelers recently issued a $1,000 face, 10 year zero coupon bond. The initial offering sold in January, 2008 for $500. Despite the fact that the bond doesn’t pay interest, the IRS says you must declare the implicit interest for tax purposes. What is the implicit interest for this bond in year 5?

A. $18.90

B. $47.36

C. $39.90

D. $20.25

E. $44.59

Reference no: EM13937357

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