Question

Ava's mom purchased a savings bond for Ava. The value of the savings bond increases by 3% each year. One year after it was purchased, the value of the savings bond was $515. Find the value of the bond when Ava's mom purchased it.

Answer 1

Original Value= $361.21

Explanation:

Giving the following information:

The value of the savings bond increases by 3% each year. One year after it was purchased, the value of the savings bond was $515.

To calculate the original value of the bond, we need to use the following formula:

OV= PV/(1+i)^n

OV= original value

PV= present value

i= increase rate

n= number of months

OV= 515 / (1,03^12)

OV= $361.21