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Crane Real Estate Company management is planning to fund a development project by issuing 10-year zero...

Crane Real Estate Company management is planning to fund a development project by issuing 10-year zero coupon bonds with a face value of $1,000. Assuming semiannual compounding, what will be the price of these bonds if the appropriate discount rate is 13.0 percent? (Round answer to 2 decimal places, e.g. 15.25.)

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Answer #1

Price of Zero Coupon Bond = Par Value/(1 + r)t

Price of Zero Coupon Bond = 1,000/(1 + 0.13/2)20

Price of Zero Coupon Bond = $283.80

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