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17 September, 10:37

Assume Sarah has owned an EE bond for 3 years. The fixed rate of interest is 8% and the current value of the bond is $4500. If Sarah were to cash in the bond tomorrow, how much interest will she lose (approximately) as a penalty

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  1. 17 September, 10:40
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    360

    Explanation:

    Given:

    Face Value of the bond = $4500

    The fixed rate of interest is r = 8%

    If f Sarah were not to cash in the bond tomorrow, it means she have the value of $4500 after 3 years. But tomorrow she were to cash, so the interest she lose is:

    I = FV*r = 4500*8% = 360
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