Suppose a Google bond will pay $4,500 ten years from now. If the going interest rate on safe 10-year bonds is 4.25%, how much is the bond worth today

The bond is worth $2,968 today

Explanation:

In order to know "how much is the bond worth today", we need to calculate the present value (PV) of the bond.

Google bond will pay $4,500 ten years from now, it means the future value (FV) is $4,500

Tenor is 10 years

Discounting rate is 4.25% pa

PV = FV / ((1 + rate) ^ tenor) = $4,500 / (1+4.25%) ^10 = $2,968