Cyberdyne Systems is issuing a series of zero coupon bonds to raise $500M to fund research...

Question

Question

Cyberdyne Systems is issuing a series of zero coupon bonds to raise $500M to fund research...

Cyberdyne Systems is issuing a series of zero coupon bonds to raise $500M to fund research and development at its Skynet division. Each bond will have a face value of

$1,000

and will mature in

15

years. The yield on the bond is

8.5%.

What is the fair price for one of Cyberdyne's zero coupon bonds?

The fair price for one of Cyberdyne's zero coupon bonds is

$___

(Round to the nearest cent.)

business finance

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Answer 1

Answer #1

The fair price for one of zero coupon bond is computed as shown below:

= Face value / (1 + YTM)^N

= $ 1,000 / (1 + 0.085)¹⁵

= $ 294.14 Approximately

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Answer 2

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Cyberdyne Systems is issuing a series of zero coupon bonds to raise​ $500M to fund research...

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