I’m trying to study for my Accounting course and I need some help to understand this question.
I. School Versus Work A. The school you would like to attend costs $100,000. To help finance your education, you need to choose whether or not to sell your 500 shares of Apple stock or 100 Apple Bonds (with $1000 denominations and 3.25% coupon rate) that are five years from their 10-year maturity date, or a combination of both. Provide the appropriate data and calculations that you 1would perform to make this decision.
Instructor Help
You need to figure out how to finance your education. You will need to look up the current market value of Apple Stock you own 500 shares of the stock. Do you want to sell this investment or a part of the investment to help pay for your $100,000 school bill? Why or why not?
In addition, you own 100 Apple Bonds (with $1000 denominations and 3.25% coupon rate) that are five years from their 10-year maturity date (you have 5 years to maturity). In this case the bonds are 1000 dominated (1000 × 100) and matures in 5 years. The coupon will be 3.25, meaning that they pay 0.0325 × 100,000= 3,250 for each year but in year 5, you will receive 103,250 (100,000 + 3,250 when the bond matures). Most bonds pay coupons and in the final year pay the principal.