1) (30 points) Consider the following two investment opportunities or cash flow streams where the interest rate is constant at 5% per year. A=(10,5,5,5),B=(10,7,8) a) ( 10 points) Which investment would you choose according to the net present value criteria? b) (5 points) What is the internal rate of return of B ? c) (5 points) How would your answer change in part a) if there is a term structure of interest rates so that the spot rates aresi 5%,52=8% and si 109% d) (S points) What are the shor mates for years 1,2 and 3 ? c) (5 points) What is your forecust of the spot rates for a term of 1 and 2 years atler a year passes by