Imagine that you are considering two ways in which you can invest some of your money. The two options have the same up-front cost, so you will simply want to choose the one that delivers the stream of benefits with the higher present value. The first potential investment is a bond that would pay you $2000at the end of each of the next three years. The other option is a piece of capital for your business that would pay you $2000 at the end of each of the next three year. $2000 at the end of next year, $4500 at the end of the following year.

a. What are the present values of the streams of benefits from the two investments if the interest rate is 9 percent

b. What if the interest rate is 14 percent

c. I the interest rate is 9 percent, at what price would the bond be traded in the bond market d. What is the current price of the bond in the market if the interest rate is 9 percent, but the economy is experiencing inflation at the rate of -3 percent (i.e prices are dropping 3 percent per year)