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Plz help Sam has $100,000 to invest and is considering 2 investment options: bonds and ordinary shares in a company. Sam has gathered the following

Plz help

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Sam has $100,000 to invest and is considering 2 investment options: bonds and ordinary shares in a company. Sam has gathered the following data about each investment option. Option 1 Option 2 Invest in $1,000 Bonds paying 6% p.a. interest half yearly with 7 years remaining until maturity. Sam's required yield on the bonds is 5% p.a. Invest in shares in Sunlove Ltd. The company has just paid a dividend of $1.00 per share to its shareholders. This is expected to grow at the rate of 4% per year indefinitely. Sam's required rate of return from the shares is 20% p.a. Shares in Sunlove Ltd are current selling for $5.50 and the bonds are currently selling for $1,058.45. Required: (a) Calculate the value of bond. (5 marks) (b) Calculate the value of one share in Seaham Ltd. (4 marks) (c) Sam is very keen to buy the shares in Seaham Ltd. Would you recommend this investment? Explain why or why not. (1 mark)

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