You have finally saved $10,000 and are ready to make your first investment. You have the three following alternatives for investing that money:

A Microsoft bond with a par value of $1,000 that pays 8.25 percent on its par value in interest, sells for S1.152.03, and matures in 14 years

Southwest Bancorp preferred stock paying a dividend of $2.98 and selling for $20.84.

Emerson Electric common stook selling for 550.21, with a par value of $5. The stock recently paid a 31.57 dividend, and the firm's earnings per share has increased from $2,27 to $3.71 in the past 5 years.

The firm expects to grow at the same rate for the foreseeable future

Your required rates of return for these investments are 7,50 percent for the bond, 12.50 percent for the preferred stook, and 13.50 perent for the common stock. Using this information, answer the following questions.

Calculate the value of each investment based on your required rate of return.

Which investment would you seleot? Wny?

o. Assume Emerson Electrio's managers expect an earnings to grew at 2 percent above the historical growth rate. How does this affect your answers to parts a and b?

d. What required rates of return would make you indifferent to all three options?