Question

A corporate bond paying $3,000 after 24 weeks earns 0.04% simple interest per week. how much did it cost to buy? (round your answer to the nearest cent.)

Answer 1

To calculate the original price of the bond, subtract the total interest earned from the final payment. The bond initially cost $2,971.20, considering it earns simple interest at a rate of 0.04% per week over a period of 24 weeks.

Step-by-step explanation:

To calculate the initial cost of a corporate bond that pays $3,000 after 24 weeks with a simple interest rate of 0.04% per week, we need to find the present value of this bond. The interest earned over 24 weeks at 0.04% per week would be ($3,000 x 0.0004 x 24). Subtracting this interest from the final payout gives us the original price of the bond:

Interest = $3,000 x 0.0004 x 24 = $28.80

Original Price = $3,000 - $28.80 = $2,971.20

Therefore, the bond cost $2,971.20 to buy originally.