Evaluating the best investment option

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Reference no: EM1372974

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.

Reference no: EM1372974

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