1. You plan to invest $1,000 in a project that is expected to have no return for the next five years. In the 6th and 7th year you expect to receive $1,000 and in the 8th year you expect to receive $500. What is the Internal Rate of Return you expect to receive on this investment?  (Round your IRR answer to 2 decimal palces (e.g., 32.16)

IRR   %

2. Which of the following would offer the best return on investment? Assume that you buy $4,000 in stock in all three cases, and ignore interest and transaction costs in all your calculations.

Buy a stock at $75 without margin and sell it 1 year later at $80.

Buy a stock at $60 with 50% margin and sell it 1 year later at $65.

Buy a stock at $65 with 75% margin and sell it 1 year later at $80.

Alternative -Select-(c)(b)(a)Item 1 offers the best return on the investment.