Suppose you purchase a zero coupon bond with a face value of $1,000, maturing in 22 years, for $215.00. Zero coupons pays the investor the face value of the maturity date. What is the implicit interest in the first year of the bonds life?

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let the interest rate is i

Price = PV = 215.00 = 1000/(1+i)^22

(1+i)^22 = 1000/215 = 4.6511628

(1+i) = 4.6511628^(1/22) = 1.072368

i = 7.2368%

This one is incorrect it states

The implicit interest = interest rate *face value = 0.072368*1000= 72.37

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