S.A.Delay Corporation, a subsidiary of the Post Office, must decide whether to issue zero coupon bonds or quarterly payment bonds to fund construction of new facilities.The R1,000 par value quarterly payment bonds would sell at R795.54, have a 10 percent annual coupon rate, and mature in ten years.At what price would the zero coupon bonds with a maturity of 10 years have to sell to earn the same effective annual rate as the quarterly payment bonds?

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The Answer of S.A.Delay Corporation, a subsidiary of the Post Office, must decide whether to issue zero coupon bonds or quarterly payment bonds to fund construction of new facilities.The R1,000 par value quarterly payment bonds would sell at R795.54, have a 10 percent annual coupon rate, and mature in ten years.At what price would the zero coupon bonds with a maturity of 10 years have to sell to earn the same effective annual rate as the quarterly payment bonds?

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