Springfield Learning sold zero coupon bonds (bonds that don't pay any interest, instead the bondholder gets just one payment, coming when the bond matures, from the issuer) and received

$1,000

for each bond that will pay

$20,000

when it matures in

35

years.

a.At what rate is Springfield Learning borrowing the money from investors?

b.If Nancy Muntz purchased a bond at the offering for

$1,000

and sold it

20

years later for the market price of

$3,200,

what annual rate of return did she earn?c.If Barney Gumble purchased Muntz's bond at the market price

($3,200)

and held it

15

years until maturity, what annual rate of return would he have earned?