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13 September, 08:13

Three years ago, you purchased a corporate bond that pays 5.8 percent. The purchase price was $1,000. What is the annual dollar amount of interest that you receive from your bond investment?

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  1. 13 September, 08:28
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    FV = PV (1 + r) n

    FV = 1,000 (1+0.058) 3

    FV = $1,184

    Dollar amount of interest

    = $1,184 - $1,000

    = $184

    Explanation:

    In this case, we need to determine the future value of $1,000 invested on the bond. Then we will deduct the present value from the future value so as to obtain the dollar amount of interest.
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