MCC Corporation currently has cash flow from operations of $10 million, capital expenditures of $8 million, and pays a dividend of $2 million (all are perpetuities). The firm has no growth prospects or debt, and shareholders expect an annual return of 5 percent. The total number of shares outstanding is 1,000. For the following investors, describe how they can achieve their desired cash flow patterns and the value of their strategy (future value) at the end of the second year. Each investor owns 10 percent of the firm and there are no taxes or transactions costs.

a. Marie lives in a very high-cost city and would like to receive a dividend of $400,000 at the end of year 1. She needs this money to finance her lifestyle.

b. Charlie has found another investment opportunity that will cost $400,000 at the end of year 1, pay him 15 percent, and pay back his initial investment of $400,000 at the end of year 2.

c. Radha is very frugal and would rather not receive dividends at the end of year 1.