Explanation:
To calculate the total interest that Manuel will receive, we need to use the formula:
Total interest = face value x coupon rate x time
Where:
- Face value is the amount of the bond, which is $2,500 in this case
- Coupon rate is the annual interest rate of the bond, which is 4.18%
- Time is the length of time that the bond will be held, which is 4 years
Substituting the given values into the formula, we get:
Total interest = $2,500 x 4.18% x 4 years
Total interest = $2,500 x 0.0418 x 4
Total interest = $417
Therefore, Manuel will receive a total of $417 in interest if he keeps the bond for four years.