Answer: she should pay $303.49 for this bond
Step-by-step explanation:
The formula for determining simple interest is expressed as
I = PRT/100
Where
I represents interest paid on the government bond.
P represents the principal or amount paid for the government bond.
R represents interest rate
T represents the duration of the government bond.
From the information given
P = 1000 - P
R = 12.75%
T = 18 years
Therefore,
1000 - P = (P × 12.75 × 18)/100
1000 - P = 229.5P/100
1000 - P = 2.295P
1000 = 2.295P + P = 3.295P
P = 1000/3.295
P = 303.49
