If you require an 11% rate of return,how much would you pay now for a bond with a face value of $3,000,pays $120 interest each year and matures in 11 years' time? Round your answer to the nearest $10.

Question

Quizplus · Accepted Answer

To find the present value of the bond, calculate the present value of the interest payments (an annuity) and the present value of the face value (a lump sum) using the required rate of return (11%). The present value of the interest payments is calculated using the formula for the present value of an annuity, and the present value of the face value is calculated using the formula for the present value of a lump sum. Adding these two present values gives approximately $1,700.

If You Require an 11% Rate of Return,how Much Would