Hello, Please explain. Let's denote the price of a nonmaturing bond(called aconsol) as Pb.

Hello, Please explain.

Let’s denote the price of a nonmaturing bond​(called a​ ;consol) as Pb. ;The equation that indicates this price is Pb=I/r​, where I is the annual net income the bond generates and r is the nominal market interest rate. ;

a. Suppose that a bond promises the holder ​$500 per year forever. The nominal market interest rate is 4 percent.

;Calculate the​ ;bond’s current​ ;price: ​$.

​(Round your answer to the nearest whole​ ;dollar.)

Thank you!