Question

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The village of Brompton has a bond obligation maturing in 7 years and will need to...

The village of Brompton has a bond obligation maturing in 7 years and will need to make a payment of $765,000. The treasurer wishes to make an investment today that will provide the needed funds at the bond's maturity. The relevant interest rate is 3.45%. The amount of the investment needed today is closest to:

A.

$603,320.34.
B.

$970,007.07.
C.

$712,040.72.

Solutions

Expert Solution

FV of Payment =765000
Rate of interest =3.45%
Number of years =7
Amount of the investment needed today =765000/(1+3.45%)^7 =603320.34 (Option a is correct option)

jeff jeffy answered 2 years ago
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