Based on the terms of a bond, it pays a holder $62,500 three years after it...

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Based on the terms of a bond, it pays a holder $62,500 three years after it...

Based on the terms of a bond, it pays a holder $62,500 three years after it is issued. The stated interest rate on this bond is 4%, which is commensurate with the market interest rate. What is the present value of this bond? Assume annual compounding.

$55,541

$55,549

$55,554

$55,559

$55,562

$55,568

none of the above

business accounting

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Answer 1

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Bond	Amount $	Note
Amount payable after 3 years	62,500.00	A
Rate of Interest	4%	B
PV factor at 4% after 3 years	0.88900	C
Present value of Bond	55,562.00	*D=AC**

So answer is $ 55,562.

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Answer 2

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Based on the terms of a bond, it pays a holder $62,500 three years after it is issued. The stated interest rate on this bond is 4%, which is commensurate with the market interest rate. What is the present value of this bond? Assume annual compounding. 1. $55,541 2. $55,549 3. $55,554 4. $55,559 5. $55,562 6. $55,568 7. none of the above
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