A Treasury STRIPS has 25 years to maturity and a yield to maturity of 8.4 percent. What is the price of the STRIPS if the face value is $100,000

Question

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The price of a Treasury STRIPS can be calculated using the formula for the present value of a single sum: Price = Face Value / (1 + yield)^n. Here, the face value is $100,000, the yield is 8.4% (or 0.084), and n is 25 years. Plugging in these values gives: Price = $100,000 / (1 + 0.084)^25 = $12,782.45.

A Treasury STRIPS Has 25 Years to Maturity and a Yield