Question

Susan purchased a government bond which has maturity value of $1,000 after 18 years at 12

3/4% simple interest. How much should she pay for this bond?

Please help with step-by-step

Answer 1

Answer: she should pay $303.49 for this bond

Explanation:

The formula for determining simple interest is expressed as

I = PRT/100

Where

I represents interest paid on the government bond.

P represents the principal or amount paid for the government bond.

R represents interest rate

T represents the duration of the government bond.

From the information given

P = 1000 - P

R = 12.75%

T = 18 years

Therefore,

1000 - P = (P × 12.75 × 18)/100

1000 - P = 229.5P/100

1000 - P = 2.295P

1000 = 2.295P + P = 3.295P

P = 1000/3.295

P = 303.49

Answer 2

435.729847495 = 435.73

Explanation:

I = prt/100

p=?

r=12³/₄= 51/4

t= 18

i = $1000

1000= (18x51/4xP)/100

1000X100 = (9XPX51/2) = 100000

459P = 2 X 100000= 200000

P = 200,000/459 = 435.729847495