Assume you are holding a 1-year bond that is expected to pay $1,075 if all goes well. However, there is a 75 percent probability that the corporation will file for bankruptcy and bondholders will receive only $400. If the required rate of return is 10 percent, what is the present value of the bond?

Multiple choice question.

$1,000.00

$517.05

$400.00

$1075.00