Your company wants to raise $10.5 million by issuing 30 -year zero-coupon bonds. If the yield to maturity on the bonds will be 5 % (annual compounded APR ), what total face value amount of bonds must you issue?

K = N

Bond Price = ∑ [ (Annual Coupon) / (1 + YTM) ^k] + Par value / (1 + YTM) ^N

k=1

K = 30

Bond Price = ∑ [ (0*1000/100) / (1 + 5/100) ^k] + 1000 / (1 + 5/100) ^30

k=1

Bond Price = 231.3774487

Therefore, FV (total face value) to issue = amount to raise x par value/price = 10500000 x 1000 / 231.3774487 = 45380394.93