Reference no: EM133145270

Question 1 - A firm has multiple net cash inflow return options from an investment of $21 million. Find the best option that would be aligned to the principal goal of Financial Management. Show your calculations to support your selection. The required rate of return for the firm is 13.43 percent.

Option (i): Cash inflows at the end of Year-1 $6 million, Year-4 $13 million and Year-5 $9 million;

Option (ii): Cash inflows of $1.42 million at the end of each quarter for next 5 years;

Option (iii): Cash inflows of $5.05 million at the beginning of each year for next 5 years;

Option (iv): Cash inflows of $0.32 million at the end of each month that will continue forever.

Option (v): Cash inflows of $5.05 million at the end of each year for next 4 years;

Question 2 - A mortgage loan of $4.1 million is to be paid in 30 years using equal weekly payments and the interest rate is 5.32 percent. What would be the weekly payment?

After 8 years: the interest rate increases by 1.0 percent. What would be the new weekly payment?