Last year a certain bond yielded 5 percent of its face value in interest. If that interest was approximately 4 percent of the bond's selling price of $7,500, what is the bond's face value? A. $6,000 B. $6,750 C. $7,425 D. $7,500 E. $9,375 The OA is A. Please, can any expert explain this PS question for me? I can't get the correct answer. I need your help. Thanks.

swerve wrote:Last year a certain bond yielded 5 percent of its face value in interest. If that interest was approximately 4 percent of the bond's selling price of $7,500, what is the bond's face value? A. $6,000 B. $6,750 C. $7,425 D. $7,500 E. $9,375 The OA is A. Please, can any expert explain this PS question for me? I can't get the correct answer. I need your help. Thanks. I = Interest FV = Face Value (1) I = FV*0.05 (2) I = 0.04*7500 FV*0.05 = 0.04*7500 FV = (4/5)*7500 FV = 6000 Answer is A

swerve wrote:Last year a certain bond yielded 5 percent of its face value in interest. If that interest was approximately 4 percent of the bond's selling price of $7,500, what is the bond's face value? A. $6,000 B. $6,750 C. $7,425 D. $7,500 E. $9,375 Since 4% of $7,500 = 0.04 x 7,500 = $300, so $300 is the interest and it’s 5% of the face value of the bond. If we let b = the bond’s face value, we have: 0.05b = 300 b = 300/0.05 b = 6000 dollars Answer: A

Let the bond's face value be x Therefore, the interest (I) = 5% of x = 0.05*x = 0.05x Also, I == 4% of $7500 =I=0.04 (7500) =$300 Since I=0.05x =300 $$x=\frac{300}{0.05}$$ x=$6000 (option A)

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