Question

Last year a certain bond with a face value of $5,000 yielded 8 percent of its face value in interest. If that interest was approximately 6.5 percent of the bond's selling price, approximately what was the bond's selling price?A. $4,063

B. $5,325
C. $5,351
D. $6,000
E. $6,154

Answer 1

E. $6,154

Explanation:

Let x represent selling price of the bond.

We have been given that last year a certain bond with a face value of $5,000 yielded 8 percent of its face value in interest.

Let us calculate 8% of $5,000 to find amount of interest as:

`\text{Amount of interest }=\$5,000* (8)/(100)`

`\text{Amount of interest }=\$50* 8`

`\text{Amount of interest }=\$400`

We are also told that the amount of interest was approximately 6.5 percent of the bond's selling price. 6.5 percent of the bond's selling price would be
`(6.5)/(100)x`.

We can represent our given information in an equation as:

`(6.5)/(100)x=\$400`

`100*(6.5)/(100)x=\$400*100`

`6.5x=\$40,000`

`(6.5x)/(6.5)=(\$40,000)/(6.5)`

`x=\$6,153.846153846`

`x\approx \$6,154`

Therefore, the selling price of the bond was approximately $6,154 and option E is the correct choice.