A) Your younger sister, Fatima, will start college in five years. She has just informed your parents she wants to go to University of Sydney of which will cost $20,000 per year for four years (assumed to come at the end of the year). Anticipating Fatima's ambitions, your parents started investing $2,500 per year five years ago and will continue to do so for five more years. REQUIRED: How much more will your parents have to invest each year for the next five years to have the necessary funds for Fatima's education? Use 10% as the appropriate interest rate (discount rate) throughout this problem. (6 marks) B) You just won the lottery! Your prize can be either taken in the form of $50,000 at the end of each of the next 20 years (ie $1,000,000 over 20 years) or as a lump sum of $550,000 paid immediately. i) If you expect to earn 5% annually on your investment over the next 20 years, which alternative should you take? Why? (3 marks) ii) Would your decision change if you could earn 7% instead? Why? (2 marks) C) A factory costs $450,000. You forecast it will produce cash inflows of $120,000 in year 1, $180,000 in year 2 and $300,000 in year 3. The discount rate is 12%. Is the factory a good investment? Show your calculations. (3 marks). Does your decision change if the discount rate is 15%? Show your calculations. (2 marks) 3 QUESTIONS 5 (14 marks) @