If a one-year bond is purchased for $700 and the interest rate is 5 percent, what will it pay in one year?

Question

Quizplus · Accepted Answer

The interest on the bond can be calculated as follows:

Interest = Principal x Interest Rate = $700 x 0.05 = $35

Therefore, the bond will pay out $35 in interest after one year.

The total amount received at the end of one year is calculated as follows:

Total Amount = Principal + Interest = $700 + $35 = $735

Therefore, the best choice is (C), which is $735.

If a One-Year Bond Is Purchased for $700 and the Interest