2. a. Suppose you have the option to choose between the following scholarships. Option 1: This scholarship covers the tuition fees for two courses in years two and three of your program. The first scholarship offers a payment of $700 now and a second payment of $800 a year from now. Option 2: This scholarship pays you $650 today to cover the travel costs of attending a student conference, and a second payment of $900 a year from now to cover tuition fees and materials. Which option would you prefer if the interest rate is 4%? And if the interest rate increased to 7%? b. Suppose an oil sands company plans to adopt a new technology that will help to reduce pollution. The company is debating the adoption of two different technologies, A and B. The table below shows the total costs and potential annual earnings for both technologies. ($ is expressed in terms of millions of dollars) Year Earnings B Capital cost A B 5 0 2.4 0 2 1 A 0 0 0.00 1 -3.00 -2.50 2 3 0 0 1.00 0 0 -1 -1 4 2 3 4 5 0 2 2.00 3.00 4.00 5.00 6 0 1 6 7 0 0 7 Assume that the two technologies are equally risky and the appropriate discount rate is 6 percent per year. i.Calculate the net present value of each technology. ii. Which technology should the firm accept? Why? iii.If the discount rate is increased from 6 percent to 9 percent per year, which technology would be feasible