Lloyd's of London is selling a perpetual bond that will provide the bondholder with $100 / year forever.  The first payment is one year from now.  Assuming an interest rate of 5%, what is the value of this bond? a) $2,000 b) $5,000 c) $2,200 d) $4,400

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 6MC: On July 1, a company sells 8-year $250,000 bonds with a stated interest rate of 6%. If interest...
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Lloyd's of London is selling a perpetual bond that will provide the bondholder with $100 / year forever.  The first payment is one year from now.  Assuming an interest rate of 5%, what is the value of this bond?

a) $2,000

b) $5,000

c) $2,200

d) $4,400

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