1. You are considering a project that promises you cash flows of 797 USD at the end of year 1, and 630 usd at the end of year 2. The cost to buy into the project is 1,377.

What is the internal rate of return (IRR) on this project?

Enter answer in percents, accurate to 2 decimal places.

2.  Grandmother Gert settled a trust with stocks and bonds of her own. She has named a bank as trustee. She has retained the power to name a new trustee if the bank should cease to serve. The trustee is to use income and principal if necessary to pay for Gert’s 18 year-old granddaughter, Jennifer’s, education through college, including tuition, fees, books, laptop, miscellaneous supplies. Gert gave her son, Saul, Jennifer’s father, the remainder interest in the trust to be paid to him upon Jennifer’s college graduation or attainment of the age of 23 years, whichever comes first. Gert also gave her son, Saul, power to direct the trustee to make distributions of principal to him, Saul, in such amounts and at such times as Saul shall direct. Jennifer is a freshman at college. The trustee is paying from the trust for college expenses, exhausting income and, as needed, dipping into principal. The trustee has had to sell some stocks to get cash to pay college expenses. Who has tax liability for the interest and dividend income of the trust? Who has the tax liability for capital gain income on sale of investments by the trust? In whose federal gross estate for estate tax purposes will the trust corpus be includable if he or she were to die now? Explain all answers.