Question

In order to finance construction of a new park, a city sold tax-free municipal bonds that will return to the purchaser an annual 11% interest rate. The city sold each bond for $1,000. If the park cost the city $500,000 and revenue from the bonds generated 20% over what was needed for construction, how many bonds were sold altogether? A. 500. B. 600. C. 700. D. 800.

Answer 1

To finance the construction of a new park, the city sold tax-free municipal bonds. To determine how many bonds were sold, we divide the total revenue generated from the bonds by the price per bond. The city sold 600 bonds altogether.

Step-by-step explanation:

To determine how many bonds were sold, we need to find out the revenue generated from the bonds. The park construction cost the city $500,000, and the revenue generated from the bonds was 20% over this cost, which means 120% of $500,000. Multiplying $500,000 by 1.2 gives us $600,000, the total revenue generated from the bonds.

Each bond was sold for $1,000, so to find out how many bonds were sold, we divide the total revenue by the price per bond. $600,000 divided by $1,000 equals 600. Therefore, 600 bonds were sold altogether.