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Week 3 Problem SetAnswer the following questions and solve the following problems in the space provided.When you are done, save the file in the format flastname_Week_3_Problem_Set.docx,where flastname is your first initial and you last name, and submit it to the appropriatedropbox.Chapter 7 (pages 225–228):1.Your brother wants to borrow $10,000 from you. He has offered to pay you back $12,000 in a year. If the cost of capital of this investment opportunity is 10%, what is its NPV? Should you undertake the investment opportunity? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.8.You are considering an investment in a clothes distributor. The company needs $100,000 today and expects to repay you $120,000 in a year from now. What is the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your cost of capital is 20%. Whatdoes the IRR rule say about whether you should invest?