ABC Corporation is issuing somezero couponbonds,which pay

Chapter , Problem 7-41

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ABC Corporation is issuing somezero couponbonds,which pay no interest. At maturity in 20 years theypay a face value of $10,000. The bonds are expectedto sell for $3118 when issued.(a)What is the effective interest rate an investorreceives?(b)A 1% fee (basedon the face value) is deductedbythe brokerage firm from the initial sales revenue.What is the effective annual interest rate paid byABC Corporation?

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