Millennium Chemist Ltd. issued a bond that has 14% coupon rate, paid semi-annually. The bond has a face value of $1,000 and will mature 10 years from now. The company has just paid a dividend of $6.50 per its ordinary share. The company is forecasted to maintain a steady growth of 10% in dividends over the foreseeable future. The companys management is considering the two following projects with the same initial investment:

YEAR	PROJECT1	PROJECT2
0	$78,500	$78,500
1	$43,000	$21,000
2	$29,000	$28,000
3	$23,000	$34,000
4	$21,000	$41,000

Required:

a) Compute the value of Millennium Chemists bond if the required rate of return in bond market is 12%. (4 marks)

b) How much would investors pay for the companys ordinary shares if the required rate of return for shares of this type is 15%? (3 marks)

c) Which project should the company choose, using NPV method if the required rate of return is 11%? (4 marks)