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Cash Flow Problem

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A zero-coupon bond pays no interest to the bondholder, but can be purchased for much less than par value. At maturity, the holder receives the par value. Suppose Mr. Investor purchases a $5,000 par municipal bond that will mature in 15 years. If he pays $1,700 for the bond, what will his IRR be over the 15 year time horizon?

Please use Excel problem and show work.

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This solution is comprised of a detailed explanation to use excel to find IRR of the cash flow. Zero-coupon bonds paying no interest to the bondholders are determined.

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