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Calculate the? bond current? price

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Reference no: EM132245004

Let's denote the price of a nonmaturing bond?(called a? consol) as Pb. The equation that indicates this price is Pb=I/r?, where I is the annual net income the bond generates and r is the nominal market interest rate.

a. Suppose that a bond promises the holder ?$500 per year forever. The nominal market interest rate is 4 percent.

Calculate the? bond's current? price: ?$.

?(Round your answer to the nearest whole? dollar.)

Reference no: EM132245004

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