What is the fair value of bond

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Problem 1: Federal Bank is issuing a growing perpetual bond with a face value of Rs. 1000. The interest amount for the first year is Rs. 40 and the interest amount will increase by 0.25% every year subsequently. What is the fair value of bond?

(A). Rs. 1000.00

(B). Rs. 1066.67

(c). Rs. 1666.67

(D). Infinity

Reference no: EM132558306

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