Answer: he should pay $891.8 for this bond
Step-by-step explanation:
The formula for determining simple interest is expressed as
I = PRT/100
Where
I represents interest paid on the government bond.
P represents the principal or amount paid for the government bond.
R represents interest rate
T represents the duration of the government bond in years.
From the information given
R = 11.25
T = 25 years
I = 3400 - P
Therefore,
3400 - P = (P × 11.25 × 25)/100
3400 - P = 2.8125P
2.8125P + P = 3400
3.8125P = 3400
P = 891.8
