1. A pension plan will have a cash outflow in 3 years. They can invest in 2 year bonds with a duration of 1.7 years and 4 year bonds with a duration of 3.5 years. To immunize the portfolio, the proportion invested in the 4 year bonds should be

A) 0.44

B) 0.28

C) 0.50

D) 0.72

Please show all work and steps

2. You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is a very common practice with expensive, high-tech equipment). The scanner costs $6,900,000, and it would be depreciated straight-line to zero over four years. Because of radiation contamination, it will actually be completely valueless in four years. You can lease it for $1,935,000 per year for four years. Assume that the tax rate is 35 percent. You can borrow at 10 percent before taxes.

Calculate the NAL. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

NAL $