You are thinking about buying a savings bond. The bond costs $42 today and will mature in 13 years with a value of $84. What annual interest rate will the bond earn? The bond will earn an annual rate of %. (Round to two decimal places.)

You are thinking about buying a savings bond. The bond costs $42 today and will mature in 13 years with a value of $84. What annual interest rate will the bond earn? The bond will earn an annual rate of %. (Round to two decimal places.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

You are thinking about buying a savings bond. The bond costs $42 today and will mature in
13 years with a value of $84. What annual interest rate will the bond earn?
The bond will earn an annual rate of %. (Round to two decimal places.)

You have decided to buy a perpetual bond. The bond makes one payment at the end of every
year forever and has an interest rate of 9%. If the bond initially costs $3,000, what is the
payment every year?
The payment at the end of each year is $ (Round to the nearest dollar.)
Enter your answer in the answer box and then click Check Answer.

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