Assignment questions: (marks: 15)

Posted: November 9th, 2022

Place your order now for a similar assignment and have exceptional work written by our team of experts, At affordable rates

For This or a Similar Paper Click To Order Now

v This assignment is an individual assignment.
V The Assignment must be submitted only in WORD format via the allocated folder.
V Assignments submitted through email will not be accepted.
V Students are advised to make their work clear and well presented. This also includes filling in your information on the cover page.
V Students must mention question numbers clearly in their answers.
V Late submitted assignments will NOT be entertained.
v Avoid plagiarism; the work should be in your own words; copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
v All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.
Assignment Questions: (Marks: 15)
1.AAA is a fast-growing communications company. The company did not pay a dividend last year and is not expected to do so for the next two years. Last year the company’s growth accelerated, and management expects to grow the business at a rate of 40 percent for the next four years before growth slows to a more stable rate of 10 percent. In the third year, the company has forecasted a dividend payment of $1.10. Dividends will grow with the company thereafter. Calculate the value of the company’s stock at the end of its rapid growth period (i.e., at the end of four years). The required rate of return for such stocks is 15 percent. What is the current value of this stock? (3 Marks)
2.Premium Manufacturing Company is evaluating two systems to use in its plant that produces the towers for a windmill power farm. The costs and the cash flows from these systems are shown below. If the company uses a 10 percent discount rate for all projects, determine which forklift system should be purchased using the net present value (NPV) approach. Also, Compute the IRR and Payback Period for each of the two systems. (3 Marks)
Year 0
Year 1
Year 2
Year 3
System 1
System 2
3.You are considering opening another restaurant in the Pizza chain. The new restaurant will have annual revenue of $200,000 and operating expenses of $80,000. Th e annual depreciation and amortization for the assets used in the restaurant will equal $20,000. An annual capital expenditure of $10,000 will be required to offset wear and tear on the assets used in the restaurant, but no additions to working capital will be required. Th e marginal tax rate will be 30 percent. Calculate the incremental annual after-tax free cash flow for the project. (3 Marks)
4.The XXX Co. currently has debt with a market value of $300 million outstanding. The debt consists of Bank loan with 4.5% refinancing interest rate. The firm also has an issue of 2 million preferred shares outstanding with a market price of $11.00 per share. The preferred shares pay an annual dividend of $1.10. Imaginary also has 14 million shares of common stock outstanding with a price of $25.00 per share. The firm is expected to pay a $3 common dividend one year from today, and that dividend is expected to increase by 5 percent per year forever. If Imaginary is subject to a 40 percent marginal tax rate, then what is the firm’s weighted average cost of capital? (3 Marks)
5.Since venture capital only invest in startup business, very high-risk investments, explain how venture capital minimize their level of risk? (3 Marks)

For This or a Similar Paper Click To Order Now

Expert paper writers are just a few clicks away

Place an order in 3 easy steps. Takes less than 5 mins.

Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price: