US Savings Bonds

Question: Can anyone help with bonds interest rate?

here is the problem!
You can buy a US government savings bond for half its face value today and at maturity in 12 yers you’ll receive the full fave or par vaule. that means you can buy a $100 par vaule savings bond for only $50 today and in 12yrs you can redeem it for $100. what interest rate are you getiing in this deal?

I’m VERY confused. if you can answer please show your work to better help me understand. Thanks in advance!

Answer: You pay $50 now in exchange for getting $100 in 12 years. That is a zero-coupon bond, meaning there are no interest payments along the way.

$100 = $50 X (1+rate)^12

Now just plug that into Excel and use the solver function. The interest rate is 5.95%.