Question: Computing Issue Price for Zero-Coupon Bonds Baiman, Inc. issues $500,000 of zero-coupon bonds that mature in 10 years. Compute the bond issue price assuming that

Computing Issue Price for Zero-Coupon Bonds

Baiman, Inc. issues $500,000 of zero-coupon bonds that mature in 10 years. Compute the bond issue price assuming that the bonds' market rate is: a. 8% per year compounded semiannually. Round your answers to the nearest dollar.

Present value of principal repayment

228,193

b. 10% per year compounded semiannually. Round your answers to the nearest dollar.

Present value of principal repayment

188,445

c. If prior to the debt issue at 10%, the firm had total assets of $3 million and total equity of $1 million, what would be the effect of the new borrowing on the financial leverage of the firm? Round your answers to two decimal places.

Financial leverage prior to borrowing	2
Financial leverage subsequent to borrowing	Answer
Increase (Decrease) in financial leverage	Answer

PLEASE ANSWER THE TWO BLANKS THAT SAYS "ANSWER". I TRIED 2.5 AND 0.5, THE ANSWER IS INCORRECT

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