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12 October, 05:48

Jimmy purchased a government bond which has maturity value of $2500 after 9 months

at 11 % simple interest. How much should he pay for this bond?

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Answers (2)
  1. 12 October, 07:27
    0
    Answer: he should pay $23095 for this bond.

    Step-by-step explanation:

    We would apply the formula for determining simple interest which is expressed as

    I = PRT/100

    Where

    I represents interest paid on the bond purchased.

    P represents the principal or amount of bond purchased.

    R represents interest rate

    T represents the duration of the bond in years.

    From the given information,

    R = 11%

    T = 9 months = 9/12 = 0.75

    I = 25000 - P

    Therefore

    25000 - P = (P * 11 * 0.75) / 100

    25000 - P = 8.25P/100 = 0.0825P

    P + 0.0825P = 25000

    1.0825P = 25000

    P = 25000/1.0825

    P = $23095
  2. 12 October, 07:46
    0
    Answer:$2706.25

    Step-by-step explanation:

    Principal (t) = $2500

    Time (t) = 9months=9/12=0.75year

    Rate (r) = 11%

    Simple interest (si) = ?

    Si = (pxrxt) / 100

    Si = (2500x11x0.75) / 100

    Si=20625/100

    Si=$206.25

    Total amount=p + si

    Total amount=2500+206.25

    Total amount=$2706.25
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