A Consol Bond (Perpetual Bond)pays $27,500 Every Year

question 58

Multiple Choice

A consol bond (perpetual bond) pays $27,500 every year.If its present value is $3,000,000,what is the interest rate?

• A)9.17%
• B)3%
• C)0.275%
• D)0.917%
• E)2.75%

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Definitions:

Fixed Cost

Costs that do not vary with the level of output, such as rent or salaries.

Variable Costs

Expenses that directly fluctuate in relation to the volume of production or output.

Profit-maximizing Output

The peak production point for a firm where it attains its greatest possible profit, characterized by the equality of marginal cost and marginal revenue.

Marginal Cost

The additional cost incurred in producing one more unit of a good or service, crucial for making production and pricing decisions.