Business Questions: Bond and Stock

An investment advisor has shown you two investments. Which investment would you recommend and why? Submit using a spreadsheet.

Bond: Coupon bond with a face value of $50,000 that can be purchased today for $48,000 that matures in 5 years. Its annual coupon rate is 9% and the coupon is paid semi-annually.

Stock: Shares of a stock can be purchased for $60 per share today. Its price of a stock is forecast to grow 8% annually for the next 5 years. (your first task is to compute the expected future price). It is expected to pay dividends of $2.00 semi-annually.

• Teaser.PNG

This is only a preview of the solution. Please use the purchase button to see the entire solution