Florida state saving bond can be converted to $1000 at maturity date of five year from purchase if the state bond are to be competitive with the USA saving bonds which pay 1% interest compounded annually at what price will the state bonds sell

Question

Business

Iris York

20 July, 22:46

Florida state saving bond can be converted to $1000 at maturity date of five year from purchase if the state bond are to be competitive with the USA saving bonds which pay 1% interest compounded annually at what price will the state bonds sell

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Answers (1)

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Double Double · Answer 1

The price will the state bonds sell would be $951.46

Explanation:

In order to calculate the price will the state bonds sell we would have to make the following calculation:

price will the state bonds sell=price to be converted / (1+interest rate) ∧n

According to given data we have the following:

price to be converted=can be converted to $1,000 at maturity date of five year from purchase

interest rate=1%

n=5

Therefore, price will the state bonds sell=$1,000 / (1+1%) ^5

price will the state bonds sell=$951.46

The price will the state bonds sell would be $951.46