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19 July, 22:59

Suppose your uncle purchased a bond that pays $100 in 5 years. If the interest rate is 6%, what is the present value of the bond? a. - 69. 37b. - 74.73c. - 97.54d. - 87.35e. - 80.11

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  1. 19 July, 23:18
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    b. - 74.73

    Explanation:

    In this question we need to find the price or present value of the bond. We know that the bond pays 100 in 5 years which means that the future value is 100, there are no payment so payments are 0, and the interest rate is 6%. We will input these values in a financial calculator and compute the PV.

    FV = 100

    PMT=0

    I=6

    N=5

    Compute PV=-74.73
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