If a United States Savings bond can be purchased for $29.50 and has a maturity value of $100 at the end of 25 years, what is the annual rate of return on the bond?

Question

Quizplus · Accepted Answer

The annual rate of return can be calculated using the formula for compound interest: $ FV = PV \times (1 + r)^n $. Here, $ FV = 100 $, $ PV = 29.50 $, and $ n = 25 $. Solving for $ r $ gives approximately 5 percent.

If a United States Savings Bond Can Be Purchased for $29.50