GRP Corporation has $500,000 in a bank account paying 0.35% annual interest. As an alternative to leaving the money in the account, the company is considering investing the entire amount for five years. Possible investments have been identified as shown below.
Investment B is five hundred five-year corporate coupon bonds which cost $1,000 each and will pay annual interest with the par value ($1,000) repaid at maturity. The coupon interest rate on the bonds is 4% and the current market rate on bonds of a similar credit rating is 3.5%.
Assuming that you will invest in only one of these (if any), which would you choose and why? This solution needs to be completed using Excel.