Question

Assume Sarah has owned an EE bond for 3 years. The fixed rate of interest is 8% and the current value of the bond is $4500. If Sarah were to cash in the bond tomorrow, how much interest will she lose (approximately) as a penalty

Answer 1

Answer:

360

Explanation:

Given:

Face Value of the bond = $4500

The fixed rate of interest is r = 8%

If f Sarah  were not to cash in the bond tomorrow, it means she have the value of $4500 after 3 years. But tomorrow she were to cash, so the interest she lose is:

I = FV*r = 4500*8% = 360