If the government finances $184 billion worth of 20 year old bonds at a fixed rate of 1.8% compounded quarterly , how much will it have to pay back when the bonds mature?

Answer 1

Pt = Po(1+r)^n.

r = (1.8%/4) / 100% = 0.0045 = QPR expressed as a decimal.

n = 4comp/yr * 20 yrs = 80 Compounding
periods.

Pt = $184B(1.0045)^80 = $263.52B.