A Corporation Has Promised to Pay $1,000 Twenty Years from Today

question 30

Multiple Choice

A corporation has promised to pay $1,000 twenty years from today for each bond sold now.No interest will be paid on the bonds during the twenty years, and the bonds are said to offer a 7 percent interest rate.Approximately how much should an investor pay for each bond?

• A)$70.00
• B)$258.42
• C)$629.56
• D)$857.43 PV = $1,000/(1.07)²⁰
• = $1,000/3.8697

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Definitions:

Chemical Processes

Involves changes in chemical substances through reactions, leading to the formation of new substances.

Secondary Sewage Treatment

A stage in wastewater treatment involving biological processes to degrade organic matter, following primary treatment which mainly removes solid materials.

Biological Process

Natural processes involving living organisms, such as growth, reproduction, and metabolism.

Detergents

Chemical compounds used to remove dirt, stains, and other substances by lowering the surface tension of water, commonly found in cleaning products.