A corporation is looking to invest $200,000. Their cost of capital is j2 = 8%. They have narrowed the possible investments to the following four choices: (i) Buy a 10-year bond that pays semi-annual coupons of $8150 and is redeemable for $202,000. (ii) Buy a perpetuity that pays $16,500 at the end of every year (iii) Buy an ordinary annuity which provides $1640 at the end of every month for 20 years (iv) Buy an investment that provides a payment of $125,000 at the end of 2-years and another payment of $130,000 at the end of 4 years. (a) Using the net present value method, determine which investment the company should buy by ranking the investments from best to worst. Show all your work. (6 + 1 = 7 marks) (b) For any investment in (a) in which NPV > 0, what is the IRR of that investment? State answer as an effective rate, j1 and be as accurate as you can [In (i) you would use the methods of section 6.6; In (ii) you would be able to solve directly for i ; In (iii) you would use linear interpolation; In (iv) you would use a quadratic]. Which investment is best? Is it the same as in (a)? (4 + 1 = 5 marks)