Final answer:
To determine how much a $200 bond with a 5% interest rate will grow to in 30 years, use the future value formula, resulting in approximately $865.90.
Step-by-step explanation:
The subject of this question is concerned with the calculation of future value of a bond using the concept of compound interest. To find out how much you will have in 30 years if you start with $200 and the bond provides an interest rate of 5%, you will use the future value formula: Future Value = Present Value × (1 + Interest Rate)Number of Periods. In this case, the Present Value is $200, the Interest Rate per period (annual) is 5% or 0.05 when expressed as a decimal, and the Number of Periods is 30 years. Plugging these into the formula gives us: Future Value = $200 × (1 + 0.05)30. Using a calculator, you will find that the Future Value comes out to be approximately $865.90. This means after 30 years, your $200 bond at a 5% interest rate would grow to $865.90.