You have $1,000 to invest for two years and have two choices:

Alternative 1: 2-year zero coupon bond selling at a price of 92.

Alternative 2: A bank deposit which pays according to the following rates:

1 year spot rate 3.0%

3 year spot rate 4.5%

1 year forward rate two years from now 4.0%

Analyse the alternatives to determine the amount received from each alternative at the end of two years. (Give answer to nearest dollar) (8 marks)