Georgia's great uncle gave her a $5,000 savings bond as a wedding gift.The bond pays $5,000 at maturity,which is in 10 years.If the interest rate is 4%,the bond has a present value of $ 3,377.82

Question

Quizplus · Accepted Answer

The present value of a bond is calculated using the formula PV = FV / (1 + r)^n, where PV is the present value, FV is the future value ($5,000), r is the annual interest rate (4% or 0.04), and n is the number of years until maturity (10). Plugging these values into the formula gives PV = $5,000 / (1 + 0.04)^10 = $3,377.97, which is approximately $3,377.82 due to rounding differences.

Georgia's Great Uncle Gave Her a $5,000 Savings Bond as a Wedding