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Zero coupon bonds: Calculate issue price and interest expense for The Ledge

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Zero coupon bonds pay no interest. The only cash investors receive is the lump-sum principle payment at maturity. On January 1, 2005 The Ledge Inc. issued $250 million of zero coupon bonds at a market yield rate of 12%. The bonds mature in 20 years.

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1. What was the January 1, 2005 issue price of these zero coupon bonds.
2. How much interest expense will The Ledge record on the bonds in 2005?

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1. What was the January 1, 2005 issue price of these zero coupon bonds.
FV = 250 million
n=20
interest ...

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