Question
the following infromation is available about green valley ltd newly issued securities and investment project under consideration. a corporate bond that has 12% annual coupen
the following infromation is available about green valley ltd newly issued securities and investment project under consideration.
a corporate bond that has 12% annual coupen rate, yield to maturity of 10.5% the bomnd have a face value of $1000 and will mature 15 years from now.
two alterantive invetsment projects of which the company only has enough capital to undertake either of them
year | projectA | project B |
initial investment | $88500 | $98500 |
1 | $45000 | $51000 |
2 | $39000 | $48000 |
3 | $33000 | $43000 |
4 | $31000 | $42000 |
A) comput the value of green valley ltd Bond.
B) advice the company management on which project the company should choose using profiitability index investment critierion if the requied rate of return is 10%.
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