Answer:
The bond should sell for a price of $59.74 today.
Explanation:
Zero Coupon Bond is a bond which does not offer any interest payment but it is issued at deep discount amount from the face value of the bond.
Price of Zero Coupon Bond = [tex]\frac{F}{( 1 + r )^t}[/tex]
F = Face / Par Value of Bond = $1,000
r = rate of interest = 11%
n = number of years = 27 years
Price of Bond = [tex]\frac{1000}{( 1 + 0.11)^27}[/tex]
Price of Bond = $59.74
As Zero coupon bond does not offer any discount so, it is valued much below the par value.
