in March 1868, an enterpreneur issued 1000 dollar bonds (to pay for an Access Ro

Question

in March 1868, an enterpreneur issued 1000 dollar bonds (to pay for an Access Road in a city). the bonds carried a 15% annual interest rate payable semi-annually. The entrepreneur paid the interest until March of 1884, at which time the city as your responsibility for the Bonds (and the road they financed.) a)The first of these bonds matured in March 2007.At the time how much interest have the city paid on this bond? B) another of these bones will not mature until March of 2146! At a time, how much interest will the city paid on on this bonds?

Explanation / Answer

Given

Bond Cost = 1000

Interext rate r = 0.15

Interest is paid semi anually Therefore t=0.5 years

Interest I = Prt = 1000*0.15*0.5

= 75

SO,Annual interest is 2I = 150

Now, the number of years from 1884 to 2007 = 123

interest paid by the city = 150*123 = $18,450

b) we found that interest paid annually = 150

As few of the bonds does not mature till 2146,we have total number of years from 1884 to 2146 = 262

interest paid by the city = 262 * 150 =$39,300

So total that the city pays is $57,750

Thank you.hope u got the answer,if u have any problem comment in here i will reply.

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