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you are considering a savings bond that will pay $100 in 12years. if the interest rate...

you are considering a savings bond that will pay $100 in 12years. if the interest rate is 1.7% , what should pay today for the bond

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Answer #1

Period of Bond = 12 years

Interest Rate = 1.7%

Future Value = $100

PV of Bond = 100/(1+0.017)12

PV = $81.69

So, one should pay $81.69 for saving bond which will give $100 after 12 years.

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