1) Consider the following two investment opportunities for all five of the following questions.

CostsBenefits

Common$2,400Yearly dividends, next dividend, one year from today,

Stock Aexpected to be $2.16/share and expected to grow at three

(100 shares)percent per year.

Bond B$2,000Yearly interest payments per bond of $125 per year,

(Two Bonds)beginning next year and ending in ten years. Principal,

(trading at par) of $1,000, per bond, to be paid in ten years.

A.Please calculate the IRRs of both investment opportunities.Please show your work.

B.Please calculate the NPVs of both investment opportunities if 10 percent per year is the

appropriate discount rate.Please show your work.

C.Which investment do you preferred?Why?Please be specific and complete.

D.What is true about the two investment opportunities with respect to the investor if a Fisherian reinvestment rate exists?Please be specific and complete.

E.Please set-up the equation for finding the Fisherian reinvestment rate. (1)Then, if possible, solve for the Fisherian reinvestment rate. (1)Please show your work.(Use back of this page, if necessary.