You have purchased a zero coupon bond that will pay $15,000 to your newborn child in 21 years. If this bond is discounted at a rate of 2.875% per year, what is today's price (present value) for this bond? A. $5,654 B. $9,348.25 C. $8,271.50 D. $15,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 8P
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Financial Accounting

You have purchased a zero coupon bond that will pay $15,000 to
your newborn child in 21 years. If this bond is discounted at a rate
of 2.875% per year, what is today's price (present value) for this
bond?
A. $5,654
B. $9,348.25
C. $8,271.50
D. $15,000
Transcribed Image Text:You have purchased a zero coupon bond that will pay $15,000 to your newborn child in 21 years. If this bond is discounted at a rate of 2.875% per year, what is today's price (present value) for this bond? A. $5,654 B. $9,348.25 C. $8,271.50 D. $15,000
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