SOLUTION: EE savings bond is sold at half face value, US Treasury guarantees it will double in value by 20 years from the issue date. What is the minimum APY for such a bond?

Question 397837: EE savings bond is sold at half face value, US Treasury guarantees it will double in value by 20 years from the issue date. What is the minimum APY for such a bond?
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
EE savings bond is sold at half face value, US Treasury guarantees it will double in value by 20 years from the issue date. What is the minimum APY for such a bond?
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P(t) = P(0) + P(0)rt
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Let P(0) be $1.
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P(20) = 1 + 20r
2 = 1 + 20r
20r = 1
r = 1/20
r = 0.05
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rate = 5%
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Cheers,
Stan H.
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