What is the current value of a zero-coupon bond that pays a face value of $1,000 at maturity in 6 years if the appropriate discount rate is 8%.

Please round your answer to the nearest hundredth.

To find the current value of a zero-coupon bond, you can use the formula:

\[
PV = \frac{FV}{(1 + r)^n}
\]

Where:
- $ PV $ is the present value of the bond (what we're trying to find).
- $ FV $ is the face value of the bond, which is $1,000.
- $ r $ is the discount rate, which is 8% or 0.08.
- $ n $ is the number of years until maturity, which is 6.

Substituting the given values into the formula:

\[
PV = \frac{1000}{(1 + 0.08)^6}
\]

Now, calculating the value:

\[
PV = \frac{1000}{(1.08)^6}
\]

\[
PV = \frac{1000}{1.586874322}
\]

\[
PV \approx 630.17
\]

So, the current value of the bond is approximately **$630.17**.

Would you like to see the detailed steps or have any questions? 

Here are some related questions:
1. How would the bond's value change if the discount rate was 10%?
2. What happens to the bond's value as the time to maturity increases?
3. How does the face value of a bond impact its present value?
4. Can you explain the concept of a zero-coupon bond?
5. How does a zero-coupon bond differ from a regular bond?
6. What are some risks associated with investing in zero-coupon bonds?
7. How would inflation affect the real return on a zero-coupon bond?
8. Can zero-coupon bonds be a good option for retirement savings?

**Tip:** Always remember that the present value of a bond decreases as the discount rate increases.

Learn how to calculate the present value of a zero-coupon bond that pays $1,000 at maturity in 6 years with an 8% discount rate. Step-by-step solution provided.

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