What is the present value of a bond that pays $121.00 one year from today if the interest rate is 10 percent per year?

Question

Quizplus · Accepted Answer

We need to calculate the present value of the bond, which is the amount that we would need to invest today to receive $121 in one year. Using the formula for present value: PV = FV / (1 + r)^n, where PV is the present value, FV is the future value, r is the interest rate, and n is the number of years. Plugging in the values, we get:
PV = $121 / (1 + 0.10)^1
PV = $110
Therefore, the present value of the bond is $110. Choice B is the correct answer.

What Is the Present Value of a Bond That Pays