Montreal Comedy Clubs Limited As the table below indicates, MCC should consider making the share investment because this will allow MCC to have more money after eighteen months. However, since shares tend to be risky and the estimated future share price is not guaranteed, the bond investment likely makes more sense, especially as the future value amounts are not that different to justify the extra risk of owning the shares. However, if interest rates rise, the value of the bond may also decline. Bonds are not a risk free investment either. [Assuming investment risk of Bond and Share is the same (i.e., they have the same discount rate of 12%), evaluate which investment is better from cash flow alone] Solution [by your assistant] - "Share" is a better investment Semi- annual Periods 1 2 3 Bond Investment Semi Future annual Value Bond Factor @ Interest 12%/2 7% =6% $35,000.00 1.1236 35,000.00 1.0600 35,000.00 1.0000 Future Value $39,326.00 37,100.00 35,000.00 Quarterly Periods 1 2 3 4 5 6 Share Investment Future Value Factor @ Quarterly 12%/4 Dividend 3% $12,500.00 1.1593 12,500.00 1.1255 12,500.00 1.0927 12,500.00 1.0609 12,500.00 1.0300 12,500.00 1.0000 531,250.00 1.0000 Future Value $14,491.25 14,068.75 13,658.75 13,261.25 12,875.00 12,500.00 531,250.00 500,000.00 1.0000 500,000.00 Principal Future value $611,426.00 $612,105.00