1. (a) Below are the financial statements of TNTT Corporation: Financial Statement for the Year Ended December 2019 (Unit: Millions) Assets Liabilities and Equity Current Assets $1,300 Debt $1,500 Net Plant 2,700 Equity 2.500 Total Assets $4,000 $4,000 Sales $1,880 Cash Expenses 850 Depreciation 150 Net Operation Income 880 Interest Expenses 200 Earning Before tax 680 Tax liability 150 Net Income $ 530 Dividend Paid $ 212 Market Information as of December 2019 Common stock outstanding 60 million Market price per share $62 Risk-free rate 3% Expected return on market portfolio 12% Estimate beta 1.70 0 Calculate the growth rate of dividends if the payout ratio remains constant. [10 marks) () Calculate the intrinsic value of the stock if its growth rate of dividends is constant. [15 marks) (II) Dividends are expected to grow at 12.72% per year in Year 1, 10% per year in Year 2, and 5% per year into the indefinite future. Is this stock undervalued? Justify your answer with appropriate calculations and arguments. [15 marks) (iv) After the initial public offering, this firm intends to raise funds by selling 10 million of new common stocks to finance its acquisition. The offer price is set at a discount of 20% of its market price. The underwriting fee is 5%, and the firm will also pay a total of $30 million in legal fees and other costs. Calculate the amount of cash proceeds the firm will actually receive, and the direct cost of this issue as a percentage of gross proceeds. [10 marks)