The following information is available about Green Valley Ltds newly issued securities and investment projects under consideration.

• A corporate bond that has 12% annual coupon rate, yield to maturity of 10.5%. The bonds have a face value of $1,000 and will mature 15 years from now.
• Two alternative investment projects, of which the company only has enough capital to undertake either of them.

Year	Project A	Project B
Initial Investment	$88,500	$98,500
1	$45,000	$51,000
2	$39,000	$48,000
3	$33,000	$43,000
4	$31,000	$42,000

Required:

1. Compute the value of Green Valley Ltds bond.

ANSWER a):

2. Advise the companys management on which project the company should choose, using Profitability Index (PI) investment criterion if the required rate of return is 10%.

ANSWER b):