Calculate the value of each investment

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Reference no: EM133264722

Question: You have finally saved $1000 are ready to make your first investment. you have the following three options for investing the money:

1) Rio Tinto Ltd bonds, with a face value $1000 and coupon interest rate of 9% are selling for $1314 and mature in 12 years.
2) southwest bancrop preference share are paying a dividend $3.50 and selling for $25.50.
3,) Harvey Norman ordinary shares are selling for $37. the shares recently paid a $1.32 dividend and the firms earning per share have increased from $1.49 to $3.06 in the past 5 years. the firm expects to grow at the same rate for the foreseeable future.
you require rate of return for these investment are 6% for the bond, 7% for the preference shares and 15% for the ordinary shares.
using the information provided, answer the following
a) calculate the value of each investment based on your required rate of returns?
b) which invest would you select and why?

Reference no: EM133264722

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