Bugle plc has some surplus funds it wishes to invest. It requires a return of 15 per cent on bonds and you have been asked to advise whether it should invest in either of the following bonds:

(a) Bond 1: 12 per cent bonds redeemable at nominal at the end of two more years. The current market value per £100 bond is £95.

(b) Bond 2: 8 per cent bonds redeemable at £110 at the end of two more years. The current market value per £100 bond is also £95.