If the Interest Rate Is R and Will Remain R

question 32

Multiple Choice

If the interest rate is r and will remain r forever, then a bond that will pay 95 dollars a year forever, starting one year from now, is worth how much today?

• A)95/(1 + r)dollars.
• B)95(1 + r)dollars.
• C)95/r dollars.
• D)95/(1 + r + r² ........+ rⁿ +........)dollars.
• E)None of the above.