. Bonus Versus Stock
Hi, I need some assistance with the following problem (2 parts)
I. School Versus Work
- 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 1,000 shares of Apple stock, 1,000 EE Savings Bonds (with $100 denominations and 4.25% coupon rate) that are five years from their 30-year maturity date, or a combination of both. Provide the appropriate data and calculations that you would perform to make this decision.
- What are the advantages and disadvantages of selling a combination of stocks and bonds? Be sure to support your answers.
- Suppose that you choose to sell your stocks, bonds, or a combination of both. What is your choice, and what is your financial reasoning behind this choice? Consider supporting your answer with quantitative data.
- Suppose that you choose to accept the job. What is your financial reasoning behind this choice? Be sure to support your answer with quantitative data.
II. Bonus Versus Stock
- The company has offered you a $5,000 bonus, which you may receive today, or 100 shares of the company’s stock, which has a current stock price of $50 per share. Mathematically, what is the best choice? Why?
- What are the advantages and disadvantages of each option? Be sure to support your answers.
- What would you ultimately choose to do? What is your financial reasoning behind this choice? Consider supporting your answer with quantitative data.
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