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.
Last year a certain bond yielded 5 percent of its face...
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I = Interestswerve 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.
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
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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: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
0.05b = 300
b = 300/0.05
b = 6000 dollars
Answer: A
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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)
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)