Question

Hayden’s mom purchased a savings bond for Hayden. The value of this savings bond increases by 6% every year. One year after it was purchased, the value of the savings bond was $530. Find the value of the bond when Hayden’s mom purchased it. Explain your reasoning!

Answer 1

The new value would be the starting value x 1 + interest rate:

New value = starting value x 1.06

The new value is 530:

530 = starting value x 1.06

Find the starting value by dividing the new value by 1.06:

start value = 530/1.06

Start value = 500

Answer: $500.
explain reasoning: because the bond is only one year old you would multiply the value of the bond by the interest rate and add the interest amount to the bond to get $530.