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Shalnov [3]
3 years ago
7

You purchased a bond at a price of $1,700. In 20 years when the bond matures, the bond will be worth $10,000. It is exactly 13 y

ears after you purchased the bond and you can sell the bond today for $6,700. If you hold the bond until it matures, what annual rate of return will you earn from today
Business
1 answer:
Mars2501 [29]3 years ago
6 0

Answer:

<u>Annual rate of return which will be earned from today is 5.89%</u>

Explanation:

FV = PV (1+r)^n

r is int Rate per anum abd n is balance period

10000 = 6700 ( 1 + r)^n

10000 = 6700 ( 1 + r)^7

( 1 + r)^7 = 10000 / 6700

= 1.4925

1+r = 1.4925^(1/7)

= 1.0589

r = 1.0589- 1

= 0.0589 i.e 5.89%

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