Final answer:
The details provided do not allow for a direct calculation of the interest rate for the project balance. Instead, an example with a $10,000 bond and changing interest rates from 6% to 9% is provided to illustrate how bond prices are affected by the interest rate changes, and how to calculate the present value of a bond.
Step-by-step explanation:
The question asks to determine the interest rate used in computing the project balance presented in a table for a typical investment with a four-year service life. However, the necessary details to calculate the interest rate directly from the project balances are not provided. To calculate an interest rate from project balances, we would need to apply a formula that accounts for the present value, future value, number of periods, and the cash flows over time
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Instead, we can explore a similar example to understand how interest rates affect bond prices. Considering a $10,000 ten-year bond at a 6% interest rate, if market interest rates increase to 9%, we would expect to pay less than $10,000 for the bond due to the bond's lower yield compared to the new market rate. To calculate what you might be willing to pay for the bond one year before maturity, you would discount the bond's future cash flows (final year's interest plus the principal repayment) at the new market interest rate of 9% to find its present value.