You have a bond that you can redeem for $10,000 one year from now.The interest rate is 10 percent per year.How much is the bond worth today?
A)$9,090.91
B)$10,000.00
C)$8,264.46
D)9,523.81

Question

Quizplus · Accepted Answer

The present value of a future cash flow can be calculated using the formula: 
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 periods.

In this case, the future value is $10,000, the interest rate is 10%, and the number of periods is 1. Plugging these values into the formula, we get:
PV = $10,000 / (1 + 0.10)^1
PV = $10,000 / 1.10
PV = $9,090.91

Therefore, the bond is worth $9,090.91 today. Option A is the correct choice.

You Have a Bond That You Can Redeem for $10,000