What will be the price of a zero coupon bonds

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Rock Hill Brewery is planning to issue 10-year bonds. The current market yield for such bonds is 8.125 percent. Assume that coupon payments are made semiannually. Management is trying to decide between issuing an 8 percent coupon bond or a zero coupon bond. Rock Hill Brewery needs to raise $1 million. Answer all the questions.

a. What will be the price of an 8 percent coupon bond?

b. How many 8 percent coupon bonds would have to be issued?

c. What will be the price of a zero coupon bonds?

d. How many zero coupon bonds will have to be issued?

Reference no: EM131063437

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