Question

Suppose ABC Co. issues $26.68 million of 23 year zero coupon bonds today. If investors require...

Suppose ABC Co. issues $26.68 million of 23 year zero coupon bonds today. If investors require a return of 5.69 percent compounded semiannually and all the bonds remain outstanding until they mature, how much (in $ millions) will ABC have to pay to redeem the bonds.

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Answer #1
                  K = Nx2
Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2
                   k=1
                  K =23x2
26.68 =∑ [(0*Par value/200)/(1 + 5.69/200)^k]     +   Par value/(1 + 5.69/200)^23x2
                   k=1
Par value = 96.96 m
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