If the interest rate is 9%, what would you expect to pay for a discount bond paying $10,000 in two years?
A)$8417
B)$8200
C)$10,000
D)$11,881

Question

Quizplus · Accepted Answer

To find the present value of a discount bond that pays $10,000 in two years at an interest rate of 9%, you use the present value formula: PV = FV / (1 + r)^n, where PV is the present value, FV is the future value ($10,000), r is the annual interest rate (9% or 0.09), and n is the number of years (2). Plugging in the values, PV = $10,000 / (1 + 0.09)^2 = $10,000 / 1.1881 = $8417 (approximately).

If the Interest Rate Is 9%, What Would You Expect