Answer:
Worth of the Bond today = $2,030.3
Explanation:
The worth the bond today is the present value of the expected future lump sum cash receivable in year 5 discounted at the going interest rate of 4.25%.
The formula below would be of help to resolve this ;
PV = FV× (1+r)^(-n)
PV- Present Value/Worth of the Bonds- ?
FV- Future value i.e expected cash receivable- 2,500
r- discount rate - 4.25%
n- maturity period of the bond- 5
PV = 2,500 × (1+0.0425)^(-5)
PV = 2,030.29
Worth of the Bond today = $2,030.3
