A Corporation Has Promised to Pay $1,000 Twenty Years from Today

Multiple Choice

A corporation has promised to pay $1,000 twenty years from today for each bond sold now.No interest will be paid on the bonds during the twenty years, and the bonds are said to offer a 7 percent interest rate.Approximately how much should an investor pay for each bond?

A) $70.00
B) $258.42
C) $629.56
D) $857.43 PV = $1,000/(1.07) ²⁰
= $1,000/3.8697