ABC Corporation is issuing some zero coupon bonds, which pay no interest. At maturity in 15 years they pay a face value of $1000. The bonds are expected to sell for $275 when issued. (a) What is the effective interest rate an investor receives? (b) A 1.5% fee (based on the face value) is deducted by the brokerage firm from the initial revenue. What is the effective annual interest rate paid by ABC Corporation?

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