Five years ago, you purchased a $1,000 corporate bond issued by general electric. the interest rate for the bond was 4 percent. today comparable bonds are paying 5 percent. what is the approximate dollar price for which you could sell your general electric bond?

We use the compounding interest formula in economics to determine the future worth of the value given the present value and the rate of interest. The applicable formula is F = P * (1+i) ^n where is the rate of interest, n is the number of years, F is the future worth and P is the present worth. Higher interset rate, investment time and present worth all incurs positive increase to the future worth of the value. The computations are

For the first 4 years,

F1 = $1000 * (1+0.04) ^4

F1 = 1169.86$

on the 5th year then,

F2 = 1169.86$ * (1.05)

F2 = 1228.35$

The final investment amount after the 5th year is $1228.35