The U S Treasury Issued a 20-Year Bond on November 16, 1998

question 104

Multiple Choice

The U. S. Treasury issued a 20-year bond on November 16, 1998, paying 6.07% interest. Thus, if you bought $100,000 worth of these bonds, you would receive $6,070 per year in interest for 20 years. At investor wishes to buy the rights to receive the interest on $100,000 worth of these bonds. The amount the investor is willing to pay is the present value of the interest payments, assuming a 6% rate of return. If we assume (incorrectly, but approximately) that the interest payments are made continuously, what will the investor pay Round your answer to the nearest cent.

• A)$70,695.85
• B) $437,051.83
• C) $335,885.16
• D) $69,880.58
• E) $706.96

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Definitions:

Conscious

The state of being aware of and able to think about one's own thoughts, feelings, and perceptions, as well as the external world.

Unconscious

Refers to the part of the mind that is inaccessible to the conscious mind but that affects behaviors and emotions.

Mental Processes

Internal cognitive operations that include thinking, reasoning, and problem-solving.

Alcohol Abuse

The harmful or hazardous use of alcohol that may lead to social, interpersonal, or health consequences.