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1- You have an opportunity to buy a financial asset that will give you the following CFs: 300 USD at the end of year 1,

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1- You have an opportunity to buy a financial asset that will give you the following CFs: 300 USD at the end of year 1, 250 USD at the end of year 2, 500 USD at the end of year 3,0,00 USD at the end of year 4, and 750 USD at the end of year 5. You agree with your friend on considering the interest rate at your bank that is 7 percent. However, she will have to pay you back on a semi-annual basis. a- What is your stated interest rate? (10 point) b- What is your effective interest rate? (15 point) C- How much should you invest on this project? (10 point) d- You are actually comparing this opportunity with another investment requiring you to pay 2,500 USD. Which one would you pick up and why? (5 point)

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