Zero Coupon Bonds: Robertsons Ltd Is Planning to Expand Its

Multiple Choice

Zero coupon bonds: Robertsons Ltd is planning to expand its specialty stores into five other states and finance the expansion by issuing 15-year zero coupon bonds with a face value of $1,000. If your opportunity cost is 8 percent and similar coupon-bearing bonds will pay semiannually, what will be the price at which you will be willing to purchase these bonds? (Round to the nearest dollar.)

A) $308
B) $383
C) $803
D) $866