You won a bond issued by the CP railroad that promises to pay the holder Tk. 100 annually forever. You plan to sell the bond three years from now. If similar investments yield 6 percent at that time, how much will the bond be worth ?

You won a bond issued by the CP railroad that promises to pay the holder Tk. 100 annually forever. You plan to sell the bond three years from now. If similar investments yield 6 percent at that time, how much will the bond be worth ?

A Tk. 1,789.42

B Tk. 1,333.34

C Tk. 1,666.67

D Tk. 918.79

Solution

Correct Answer: Option C