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?
12 October, 07:27
Answer: he should pay $23095 for this bond.
We would apply the formula for determining simple interest which is expressed as
I = PRT/100
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
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
12 October, 07:46
Principal (t) = $2500
Time (t) = 9months=9/12=0.75year
Rate (r) = 11%
Simple interest (si) = ?
Si = (pxrxt) / 100
Si = (2500x11x0.75) / 100
Total amount=p + si
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» 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?