If the Interest Rate Is 4

question 149

Multiple Choice

If the interest rate is 4.5 percent,what is the present value of a payment of $500 to be made one year from today?

• A)$457.14
• B)$468.02
• C)$478.47
• D)None of the above are correct to the nearest cent.

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Definitions:

Par Value

The stated value or face amount of a bond, stock share, or coupon as declared by the issuing entity.

Journal Entry

A record in the books of accounts that notes the details of a financial transaction.

Semiannual Interest

Interest that is calculated and paid twice a year, often used in bond and loan agreements.

Redeem Bonds

This term refers to the act of paying off or buying back bonds issued by a company before their maturity date, often at a predetermined price.