Honda needs to raise RM 5 million and plan to issue a 30-year bond for this purpose. The current required return on Honda’s bond issue will be 6 per cent. The top management of Honda evaluating...

Honda needs to raise RM 5 million and plan to issue a 30-year bond for this

purpose. The current required return on Honda’s bond issue will be 6 per cent.

The top management of Honda evaluating two-issue alternatives: a semiannual

coupon bond with a 5 per cent coupon rate and zero-coupon bond. The

company’s tax rate in Malaysia is 23 per cent.

At the maturity, what will Honda’s repayment be if they issue the coupon bonds

and zeroes coupon bonds?