Your grandparents have just given you a $50,000 savings bond that matures in 20 years. If the discount rate is 10%, what did they pay for the bond?

Question

Quizplus · Accepted Answer

The correct answer is A.The present value of the bond can be calculated using the formula:PV = FV / (1 + r)^nwhere:PV is the present valueFV is the future valuer is the discount raten is the number of yearsIn this case, the future value is $50,000, the discount rate is 10%, and the number of years is 20. Plugging these values into the formula, we get:PV = 50,000 / (1 + 0.10)^20PV = $7,450Therefore, your grandparents paid $7,450 for the bond.

Your Grandparents Have Just Given You a $50,000 Savings Bond