Calculate the cash value of a bond that will mature with a value of $16 500 in 7 years and 5 months. The bond is discounted at 5.8% compounded semi-annually.
A) $10 797.48
B) $10 979.48
C) $10 997.48
D) $10 779.48
E) $11 117.48

Question

Quizplus · Accepted Answer

To find the present value of the bond, use the formula for present value of a single sum: PV = FV / (1 + r/n)^(nt). Here, FV = $16,500, r = 0.058, n = 2, and t = 7 + 5/12 years. Calculate PV to find the cash value.

Calculate the Cash Value of a Bond That Will Mature