J&J Enterprises Wants to Issue Eighty 20-Year, $1,000 Zero-Coupon Bonds

question 97

Multiple Choice

J&J Enterprises wants to issue eighty 20-year, $1,000 zero-coupon bonds. If each bond is to yield 8%, how much will J&J receive (ignoring issuance costs) when the bonds are first sold?

• A) $11,212
• B) $12,393
• C) $17,164
• D) $18,880
• E) $20,000

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Definitions:

Substitute Goods

Products or services that can be used in place of each other, where an increase in the price of one leads to an increase in demand for the other.

Demand Increase

A rise in the quantity of a good or service that consumers are willing and able to buy at each price level.

Price Increase

A situation where the cost of goods or services rises relative to previous prices, often due to factors like inflation or increased demand.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, opposite to normal goods.