you have a bond original value was $100 paying 8.5% interest compounded annually and was 100 years old. what amount is that now owed on this bond to you.
A = P(1+r)^t
plug in your numbers
thank you
349,119 and change
To calculate the current value of a bond, we need to consider the annual interest rate, the number of years, and the compounding frequency. In this case, the bond has an original value of $100, an annual interest rate of 8.5%, and it has been held for 100 years with annual compounding.
To calculate the current value of the bond, we can use the formula for compound interest:
A = P(1 + r/n)^(n*t)
Where:
A = the final amount (current value)
P = the principal amount (original value)
r = annual interest rate (in decimal form)
n = number of compounding periods per year
t = number of years
In this case, for an annual compounding frequency, we have:
P = $100
r = 8.5% = 0.085
n = 1
t = 100
Plugging these values into the formula:
A = $100(1 + 0.085/1)^(1*100)
A = $100(1.085)^100
A ≈ $13,772.20
Therefore, the current value owed on this bond is approximately $13,772.20.