4. Suppose you can have option A: $3,000 today, or option B: $10,000 in 10 years. Which option do you take? Use 12% for discounting (or 12% for your interest rate). At what interest rate (be specific!) are you indifferent about making the two choices? 5. Imagine you buy a bond, priced at $1,000. This bond pays $50 in interest every year and in the fifth year it pays the $50 in interest plus the return of the $1,000 principle. The cashflows for the 5 years are given as follows: Initial Investment (Co) $1,000 Year 1 $50 Year 2 $50 Year 3 $50 Year 4 $50 Year 5 $1,050 Using 8% for discounting, what is the net present value (NPV) of this investment? Find the internal rate of return (IRR). If you suddenly decide you are ok with a 4% return, do you make the initial investment? At what interest rate (be specific!) are you indifferent about making the initial investment