a.GenTech Ltd needs to save $50 million to expand its production lines in six years' time. There are three investment options to consider:

• ABC bank: monthly payments due at the end of each month.The interest rate is 3.5% p.a. compounding monthly.
• XYZ bank: annual payments due at the end of each year.The interest rate is 3.55% p.a.
• CDC bank: payments to be made at the end of year 2, 4 and 6.The interest rate is 3.56% p.a.

i.Calculate the payments for each of these options, (show all workings).[7.5 marks]

ii.Indicate which one you prefer.You will need to justify your decision[2.5 marks]

b.i.Is 'risk' a bad thing? Define risk in terms of investment.[3 marks]

iiExplain the Australian dividend imputation credit system and how it applies in Australia. Include an analysis of how the receipt of franking credits will result in differing returns for Australian resident and international investors.Provide an example.