Lopez Information Systems is planning to issue 10-year bonds. The going market rate for such bonds is 8.125 percent. Assume that coupon payments will be semi-annual. 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 the 8 percent coupon bonds?
b. How many coupon bonds would have to be issued?
c. What will be the price of the zero-coupon bonds?
d. How many zero-coupon bonds will have to be issued?