Answer:
Price =$1,285.71
Explanation:
A perpetual bond is that which pays a fixed amount of interest income for the foreseeable future. It issuer does not always have an obligation for redemption under the terms of loan contract.
The price of perpetual bond can be determined as the present value of a perpetuity. An perpetuity is an annuity that pays a fixed amount of cash flow for a certain number of years
PV = A/r
PV- price of bond- ?
A- annual interest - 45
r- Yield to maturity- 3.5%
Price = 45/0.035=1,285.714
Price =$1,285.71
