Answer:
2,967.92 ( dollars )
Step-by-step explanation:
The amount the bond is worth, should be the present value of the bond, other wise known as PV. If it is given that Google.com bond will pay $ 4,500 ten years from now, it should be that the future value, otherwise known as FV, is 4,500 dollars.
Consider the given. There is a 4.25 percent discount rate, a time span of 10 years ( tenor / time ) and of course a future value of 4,500 dollars. Using this, we can calculate the present value -
[tex]PV = FV / ( ( 1 + rate )^{time} ),\\PV = 4,500 / ( 1 + 4.25 / 100 )^{10}\\----\\( Calculations ) PV = ( About ) 2,967.92 ( dollars )\\Solution = 2968 ( dollars )[/tex]
As you can see, through simple calculations the solution should be that the bond worth is about $ 2,967.92
