Final answer:
The annual interest rate on the bond is 25%.
Step-by-step explanation:
To calculate the annual interest rate on a bond, we need to divide the total interest earned by the cost of the bond and then multiply by 100 to get a percentage. In this case, the bond costs $1,000 and will pay a total of $250 in simple interest over its lifetime. So, the annual interest rate can be calculated as follows:
Annual interest rate = (Total interest / Bond cost) * 100
Substituting the given values:
Annual interest rate = (250 / 1000) * 100 = 25%