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29 January, 12:30

Bradley is looking to purchase a consol bond (perpetuity) from the British Government. The bond pays $100 per year and is currently selling at $2,250. What is the assumed annual cost of capital of this bond?

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  1. 29 January, 12:54
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    Annual Cost of capital of this bond = Annual interest : Bond price

    = $100 : $2,250

    = 4.44%
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