The value of the bond is computed as shown below:
Present value = Future value / ( 1 + r )n
Future value = $ 1,000
r = 5% or 0.05
n = 5
Plugging these values in the above mentioned formula, we shall get:
= $ 1,000 / ( 1 + 0.05 )5
= $ 783.53 Approximately
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