Answer:
Interest rate = 4.75% (approx)
Explanation:
Given:
Face value of bond = $1,000
Present value of bond = $954.70
Interest rate = ?
Computation of Interest rate :
[tex]Interest rate = [\frac{Face value of bond}{Present value of bond}-1] \times 100\\[/tex]
[tex]Interest rate = [\frac{1,000}{954.70}-1] \times 100\\\\Interest rate = [1.04744946-1] \times 100\\Interest rate = [0.04744946] \times 100\\= 4.744946[/tex]
Interest rate = 4.744946%
Interest rate = 4.75% (approx)
