A zero-interest bond pays $100,000 in seven years. What amount would you be willing to pay to acquire the bond today if you want to earn a return of approximately 10%? Use the present value of $1 table shown below. (Do not round any intermediary calculations, and round your final answer to the nearest dollar.)
Excerpt of Present Value of $1 Table
$$\begin{array} { | c | c | }
\hline \text { Periods } & \mathbf { 1 0 } \% \
\hline 1 & 0.90909 \
\hline 2 & 0.82645 \
\hline 3 & 0.75131 \
\hline 4 & 0.68301 \
\hline 5 & 0.62092 \
\hline 6 & 0.56447 \
\hline 7 & 0.51316 \
\hline
\end{array}$$

Question

A zero-interest bond pays $100,000 in seven years. What amount would you be willing to pay to acquire the bond today if you want to earn a return of approximately 10%? Use the present value of $1 table shown below. (Do not round any intermediary calculations, and round your final answer to the nearest dollar.) 
Excerpt of Present Value of $1 Table
$$\begin{array} { | c | c | } 
\hline \text { Periods } & \mathbf { 1 0 } \% \
\hline 1 & 0.90909 \
\hline 2 & 0.82645 \
\hline 3 & 0.75131 \
\hline 4 & 0.68301 \
\hline 5 & 0.62092 \
\hline 6 & 0.56447 \
\hline 7 & 0.51316 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The present value of $100,000 in seven years at a 10% discount rate is calculated by multiplying $100,000 by the present value factor for 7 periods at 10%, which is 0.51316. Thus, $100,000 * 0.51316 = $51,316.

A Zero-Interest Bond Pays $100,000 in Seven Years A) $90,909 B) $68,301 C) $51,316 D) $30,000

A Zero-Interest Bond Pays $100,000 in Seven Years A) $90,909
B) $68,301
C) $51,316
D) $30,000