Pretend you are a private equity analyst with two investment options.

PRESENT VALUE QUESTION 1 (A) Pretend you are a private equity analyst with two investment options. Option (1) requires a $1,000,000 initial investment (today) in DAT enter prises, a rm that specializes in making shoes that won't catch on re if you run too fast in them. You expect your investment in DAT will generate $100k in income per year beginning at the end of year 3. You will be able to sell DAT enterprises for $2, 500, 000 in year 8. Option (2) requires only a $250, 000 initial investment in Husky Corp., a Seattle based rm that specializes in football jerseys that won't tear if the player is consistently landing on his back. Husky Corp. will generate no cash, but you can resell your investment in Husky Corp. for $2, 500, 000 in year 10 (pre sumably because the demand for such jerseys in Seattle is quite high). You have $1,000, 000 to invest. You cannot borrow money or invest on mar gin. Further, suppose you could earn a 2% return in the money market if you invest in neither option. How do you invest? (B) How does your analysis change if the rate of return in the money market is 5%? What about 0.25%