Value of each investment based on required rate of return

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You have finally saved $1000 and are ready to make your first investment. You have the following three options for investing that 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 ban corp preference share are paying dividend $3.50 and selling for $25.50

3. Harvey norman ordinry share are selling for 37$ . The shre recently paid a $1.32 dividend and the firms earning per share have increased from $1.49 to $ 3.60 in the pst 5 yers. Expected to grow at the same rate

Your required rate of return for these investment are 6% for bond, 7% for preferance share and 15% for ordinary share

Calculate the value of each investment based on your required rate of return.

Which investment you select and why.

Reference no: EM133272875

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