Question 1 (this question has three parts, a) b) and c)) (18 marks) Part a. James Holloway has just won a television game show. There are two ways in which James can receive his price: Option 1: a once-off payment of $100,000 in 18 months. Option 2: a payment of $5000 a month for 18 months with the payment increases by 0.5% every month. Assuming that the monthly discount rate is 2% and that interest rate compounds monthly. which option is financially better for James? (6 marks) Part b. The table below provides stock market information for three different countries. Country A Country B Country C Information asymmetry Moderate Low Moderate Transaction Cost Moderate Moderate High Number of market participants Moderate Moderate Low Using the knowledge you have obtained in this unit, explain which country you believe would have the largest and which country would have the smallest difference between market price and the intrinsic value of shares listed on their respective securities exchange? (6 marks) Part c. Melbourne Ltd is now on a fast-growth phase and expects its dividends to grow at a rate of 15 per cent for the next 4 years. The dividends will then settle to a constant-growth rate of 5 per cent. The current dividend was just paid at $3. If the required rate of return is 10 per cent, what is the value of the share? (6 marks)