4. Virusator is a bio-medical start-up specializing in producing vaccines and treatments to battle dangerous viruses. To finance its activities it recently took a one year loan of two million dollars, at an annual effective rate of 10%. It must repay the loan in September 2021 (a year from now). Earnings this coming year are expected to be $3.3 million. Assume earning are received in September 2021 (i.e, one year from now). To finance growth it plans on reinvesting 90% of the earnings left after repaying the loan. The remainder will be paid as a dividend to shareholders. Virusator's earnings will grow at a rate of 50% per year, starting from September 2021, for a duration of 3 years. Then it will enter a more mature growth phase and grow at a constant rate of 5% per annum forever after. Virusator will keep the payout policy unchanged for the first 3 years. Afterwards it will payout 70% of earnings as dividends to shareholders. Virusator's cost of equity capital is 20%. 4.a Value Virusator. 4.b Some analysts estimate that the cost of equity during the four high-risk start up years (2021-2024) is higher, at 30% p. a., and 20% thereafter. How does this assumption affect the value you found in the previous section? 4.c A young and ambitious board member suggested that in the first four years the company will reinvest all its retained earnings after paying creditors. He believes that this will lead to an increase of the earnings growth rate in the initial phase (i.e. for 3 years starting from September 2021) from 50% to 75%. He further suggests that starting from year 5 the company payout 55% of earnings as dividends to shareholders. Based on his estimates this strategy will impact the growth rate only in the short run, so that the growth rate in the mature phase will be 5%. The strategy is not expected to impact the company's cost of capital. If shareholders are asked to vote on this proposal should they support it