Solve the problem.
-Find the face value (to the nearest thousand dollars) of the 20 -year zero-coupon bond at $5.4 \%$ (compounded semiannually) with a price of $\$ 17,225$.
A) $\$ 50,000$
B) $\$ 20,200$
C) $\$ 49,500$
D) $\$ 20,000$

Question

Quizplus · Accepted Answer

The formula for the face value of a zero-coupon bond is $ F = P(1 + r/n)^{nt} $. Here, $ P = 17225 $, $ r = 0.054 $, $ n = 2 $, and $ t = 20 $. Solving gives $ F \approx 50000 $.

Solve the Problem 5.4%5.4 \%5.4% (Compounded Semiannually) with a Price Of $17,225\$ 17,225$17,225

Solve the Problem $5.4 \%$ (Compounded Semiannually) with a Price Of $\$ 17,225$