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Imagination Dragons Corporation needs to raise funds to finance a plant expansion, and it has decided to issue 20-year zero coupon bonds with a par value of $1,000 each to raise the money. The required return on the bonds will be 7 percent. Assume semi annual compounding periods.

a. what will these bonds sell for at insurance?

b. Using the IRS amortization rule, what interest deduction can the company take on these bonds in the first year? In the last year?

c. Repeat part (b) using the straight-line method for the interest deduction.

(round your answers to 2 decimal places)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91383393

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