Alex Buys a Consol (Perpetual Bond)for $90,000

Multiple Choice

Alex buys a consol (perpetual bond) for $90,000.This consol promises him a fixed cash flow of $10,000 every year,forever,starting at the end of the year.If the current market rate is 10%,what is the net present value of his purchase?

A) $10,000
B) $100,000
C) $90,000
D) $80,000
E) $190,000