Suppose a State of New York bond will pay $1,000 ten years from now.If the going interest rate on these 10-year bonds is 4.9%,how much is the bond worth today?

Question

Quizplus · Accepted Answer

The present value of the bond is calculated using the formula for present value: PV = FV / (1 + r)^n, where FV is the future value ($1,000), r is the interest rate (4.9% or 0.049), and n is the number of years (10). Plugging in the values, PV = 1000 / (1 + 0.049)^10 = $619.79.

Suppose a State of New York Bond Will Pay $1,000