A corporation is looking to invest $200,000. Their cost ofcapital is j2 = 8%. They have narrowed the possible investments tothe following four choices: (i) Buy a 10-year bond that payssemi-annual coupons of $8150 and is redeemable for $202,000. (ii)Buy a perpetuity that pays $16,500 at the end of every year (iii)Buy an ordinary annuity which provides $1640 at the end of everymonth for 20 years (iv) Buy an investment that provides a paymentof $125,000 at the end of 2-years and another payment of $130,000at the end of 4 years. (a) Using the net present value method,determine which investment the company should buy by ranking theinvestments from best to worst. Show all your work. (6 + 1 = 7marks) (b) For any investment in (a) in which NPV > 0, what isthe IRR of that investment? State answer as an effective rate, j1and be as accurate as you can [In (i) you would use the methods ofsection 6.6; In (ii) you would be able to solve directly for i ; In(iii) you would use linear interpolation; In (iv) you would use aquadratic]. Which investment is best? Is it the same as in (a)? (4+ 1 = 5 marks)