You have a savings bond that will be worth $500 when it matures in 3 years,but you need cash today.If the current going rate of interest is 5%,what is your bond worth if you sell it today (rounded to the nearest dollar)?
A) $475
B) $432
C) $425
D) $412

Question

Quizplus · Accepted Answer

The present value (PV) of the bond can be calculated using the formula PV = FV / (1 + r)^n, where FV is the future value ($500), r is the interest rate (0.05), and n is the number of years (3). PV = 500 / (1.05)^3 ≈ $432.

You Have a Savings Bond That Will Be Worth $500