Question: Lopez Information Systems is planning to issue 10-year bonds. The going market yield for such bonds is 8.125 percent. Assume that coupon payments will be

Lopez Information Systems is planning to issue 10-year bonds. The going market yield for such bonds is 8.125 percent. Assume that coupon payments will be made semiannually. The firm is trying to decide between issuing an 8 percent coupon bond or a zero coupon bond. The company needs to raise $1 million.

a. What will be the price of an 8 percent coupon bond?

b. How many 8 percent coupon bonds would have to be issued?

c. What will be the price of a zero coupon bond?

d. How many zero coupon bonds will have to be issued?

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