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The school you would like to attend costs $100,000
The school you would like to attend costs $100,000. To help finance your education, you need to choose whether or not to sell any of your 500 shares of Apple stock you bought five years ago, 100 Apple bonds (each with a $1,000 face value and a 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 would perform to make this decision.
The decision is whether to finance education with selling bond,stocks or a combination of both.
Expert Solution
When the apple bonds are sold;
Coupon rate = $ 100,000 * 3.25 %
= $ 3,250
Year 1 , year 2 , year 3, year 4 = $ 3,250 each year
Year 5, $ 3,250 + $ 100,000
= $ 103,250
Total amount = (3250* 4)+ 103250
$ 116,250
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