If the Interest Rate Is R and Will Remain R

question 20

Multiple Choice

If the interest rate is r and will remain r forever, then a bond that will pay 75 dollars a year forever, starting one year from now, is worth how much today?

• A) 75/(1 + r) dollars.
• B) 75(1 + r) dollars.
• C) 75/(1 + r+r²+........+rⁿ+........) dollars.
• D) 75/ r dollars.
• E) None of the above.