Consider a one-year discount bond that pays $1,500 one year from now.If the annual rate of discount is 4 percent, the present value of the bond is

Question

Quizplus · Accepted Answer

The present value of the bond can be calculated using the formula:
Present Value = Future Value / (1 + annual discount rate)^n 
where n is the number of years until the bond matures.
In this case, n=1 and the annual discount rate is 4% (or 0.04).
Thus, the present value of the bond is:
Present Value = $1,500 / (1 + 0.04)^1 = $1,442.31 (rounded to nearest cent)
Therefore, the best choice is D, which is the closest option to the calculated present value.

Consider a One-Year Discount Bond That Pays $1,500 One Year