Evaluating the best investment option
Managerial Economics
An investment fund is planning 2-long term investments. Determine which is the best investment assuming equal risks and a ten year investment?
Bond : Coupon bond with a face value of $100,000 that can be purchased today for $70,000 that matures in 10 years. Its annual coupon rate is 8% paid quarterly.
Stock: A stock whose shares can be purchased for $84 per share today and its price is forecast to grow 12% annually for the next 10 years. It will pay dividends of $7.50 quarterly.
