Answer:
Step-by-step explanation:
To calculate the annual rate of return on a savings bond, we need to determine the difference between the maturity value of the bond and its purchase price, and divide this difference by the number of years the bond takes to mature. We can then divide this value by the purchase price of the bond and multiply by 100% to express the result as a percentage.
In this case, the maturity value of the bond is $100 and the purchase price is $29.50. The bond takes 25 years to mature. We can use the following formula to calculate the annual rate of return:
Annual rate of return = (Maturity value - Purchase price) / (Number of years to maturity * Purchase price) * 100%
Plugging in the values for this bond, we get:
Annual rate of return = ($100 - $29.50) / (25 * $29.50) * 100% = 3.44%
Therefore, the annual rate of return on this bond is approximately 3.44%.