A $50 U.S. Savings Bond paying 6.22% compounded monthly matures in 11 years 2 months. What is the present value of the bond?

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- Oct 26th 2008, 08:42 AMdc52789Finding present value
A $50 U.S. Savings Bond paying 6.22% compounded monthly matures in 11 years 2 months. What is the present value of the bond?

- Oct 26th 2008, 08:55 AMJhevon
the formula for the present value, , is given by

where is the future value of the money, in this case, the value at maturity, is the interest rate in decimal form, and is the number of years it will take to get to , which in this case, is .

now to find , use the regular compound interest formula, then plug it into the formula above to find the present value - Oct 26th 2008, 09:03 AMdc52789
- Oct 26th 2008, 09:07 AMJhevon
what i gave you are definitions. and the 67/6 is 11 years and 2 months. this is 11 years and 2/12 years, which is 67/2 years if you add those fractions, or 11.167 years.

the formula for P is the present value, which is what you are after. and i told you what the pieces of the formula are. so just find them one by one. r and n were given, now find F as directed - Oct 26th 2008, 09:19 AMdc52789
- Oct 26th 2008, 09:44 AMJhevon
- Oct 26th 2008, 09:49 AMdc52789
- Oct 26th 2008, 09:54 AMJhevon
- Oct 26th 2008, 10:10 AMdc52789
- Oct 26th 2008, 10:20 AMJhevon
- Oct 26th 2008, 10:31 AMdc52789
- Oct 26th 2008, 10:48 AMJhevon
- Oct 26th 2008, 10:56 AMdc52789
- Oct 26th 2008, 11:00 AMJhevon
- Nov 5th 2008, 10:11 PMdc52789