Question

18 A municipal bond that was issued 3 years ago has a face value of $5000 and a bond interest rate of 4% per year payable semiannually. The bond has a maturity date of 20 years from the date it was issued. If the interest rate in the marketplace is 8% per year, compounded quarterly, the value of n that must be used in the P/A equation to calculate the present worth of the bond is (2 Points) 34 40 80 68

          18
A municipal bond that was issued 3 years ago has a face value of $5000 and a bond interest
rate of 4% per year payable semiannually. The bond has a maturity date of 20 years from the
date it was issued. If the interest rate in the marketplace is 8% per year, compounded
quarterly, the value of n that must be used in the P/A equation to calculate the present worth
of the bond is
(2 Points)
34
40
80
68

18
A municipal bond that was issued 3 years ago has a face value of 5000 and a bond interest
rate of 4% per year payable semiannually. The bond has a maturity date of 20 years from the
date it was issued. If the interest rate in the marketplace is 8% per year, compounded
quarterly, the value of n that must be used in the P/A equation to calculate the present worth
of the bond is
(2 Points)
34
40
80
68

Added by Michelle C.

Principles of Economics

Gregory Mankiw 8th Edition

Instant Answer

Solved by Expert Himani Sood

Step 1

The bond has a maturity date of 20 years, and interest is paid semiannually. Therefore, there are 20 * 2 = 40 periods. Show more…

Show all steps

Thanks for your feedback!

A municipal bond that was issued 3 years ago has a face value of $5000 and a bond interest rate of 4% per year payable semiannually. The bond has a maturity date of 20 years from the date it was issued. If the interest rate in the marketplace is 8% per year, compounded quarterly, the value of n that must be used in the P/A equation to calculate the present worth of the bond is (2 Points) 34 40 80 68