What price must pa sell its bonds

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Reference no: EM133378727

Question: Pennsylvania is repairing Interstate 495, the Northeast Extension, the major North/South highway in the state. Pennsylvania has decided to sell state bonds to cover the needed repairs. A Pennsylvania state savings bond can be converted to $100 at maturity eight years from purchase. If the state bonds are to be competitive with U.S. savings bonds which pay 5 % annual interest (compounded annually), at what price must PA sell its bonds? (Assume no cash payments on savings bonds prior to redemption.) Show the formula and all work.

Reference no: EM133378727

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