Assuming that you have a business that has extra cash of 200,000. You are considering two investment
Question:
Assuming that you have a business that has extra cash of 200,000. You are considering two investment options. Firstly, you are considering investing the amount equally in both bonds by purchasing one of each type. Secondly, you are considering using the money to purchase as many shares TW Ltd as you can (round off the number of shares). You plan of selling your shares at the 6th year and exiting the stock market. The required rate of return for the bond market is 9% and the required return of the stock market is 15%. Use the Net Present Value method, decide which option would be better? (hint: your cash outflow will be the price of the stock and bond now and you have already calculated the PV of inflows in the above questions)
Organic Chemistry
ISBN: 978-1118133576
11th edition
Authors: Graham Solomons, Craig Fryhle, Scott Snyder