J&J Enterprises wants to issue eighty 20-year, $1,000 zero-coupon bonds. If each bond is to yield 8%, how much will J&J receive (ignoring issuance costs) when the bonds are first sold?

A) $11,212
B) $12,393
C) $17,164
D) $18,880
E) $20,000

Question

Julian Martinez · Accepted Answer

Final Answer : C, Explanation :  The present value of a zero-coupon bond is calculated using the formula PV = F / (1 + r)^n, where F is the face value, r is the yield, and n is the number of years. For one bond: PV = $1,000 / (1 + 0.08)^20 = $214.55. For eighty bonds: $214.55 * 80 = $17,164.

J&J Enterprises wants to issue eighty 20-year, $1,000 zero-coupon bonds. If each bond is to yield 8%, how much will J&J receive (ignoring issuance costs) when the bonds are first sold?

A) $11,212
B) $12,393
C) $17,164
D) $18,880
E) $20,000

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Learning Objectives

Related questions

J&J Enterprises wants to issue eighty 20-year, $1,000 zero-coupon bonds. If each bond is to yield 8%, how much will J&J receive (ignoring issuance costs) when the bonds are first sold?A) $11,212B) $12,393C) $17,164D) $18,880E) $20,000

Definitions

Learning Objectives

Learning Objectives

Related questions

J&J Enterprises wants to issue eighty 20-year, $1,000 zero-coupon bonds. If each bond is to yield 8%, how much will J&J receive (ignoring issuance costs) when the bonds are first sold?

A) $11,212
B) $12,393
C) $17,164
D) $18,880
E) $20,000