4. You are given with the following information statements of a public firm Bambie in the airline industry concurrently. (Notice that all negative numbers are parenthesized). The firm has issued 12 million shares of common stock with current market price as $45/per share, the expected dividend is $4.90/per share with 3.5% growth rate, 300,000 shares of preferred stocks with promised preferred dividend and preferred stock price as $2.20/per share and $22.5/per share, respectively. The firm also has currently, 2 million 4.6%-coupon bonds with $1,000 face value that pays the coupons semi-annually. The current bond price is $735/per bond. The bonds are expected to mature at 2020. Answer the following questions:

a) If using the market prices for assessment on rates of return, what is the rate of return the common stock of Bambie? What is the rate of return for their preferred stocks?

b) What is the bond's yield to maturity of the firm's corporate bond?

c) Suppose you are also given with the following financial statements of Bambie for the past three years. What are the historical returns on equity for this company for the past three years? Is the firm Bambie doing well from the perspectives of shareholders? Why or why not?

d) Is this firm well-diversified with their arrangement of capital? That is, are they well diversified with different sources of capital?

e) Based on the given information, provide your ratios analyses. Apply the Du-Pont model and interpret your results for the firm's performance.

f) Provide the common size statements for both Balance Sheet and Income Statement. What kind of noticeable pattern you may identify for the firm? Is this usual for the airline industry?

Balance Sheet (in millions)

2014 20152016

Assets

Cash 3010 473

Marketable securities 1001000

Accounts Receivable920 150800

Inventory710178450

Plant, Building, and Equipment's (net)87218021209

Investments in affiliates030329

Total Assets 263222703261

Liabilities

Short-term debts 107 930

Advances from customers 11134134

Accounts payable 85192771

Interest payable 759862

Tax payable 127147128

Other Accrued Expenses 201535

Bonds payable 925 486750

Stockholders' Equity

Common stock 102110551175

Additional paid-in capital 7415647

Retained earning 87 78129

Total liabilities and equities 263222703261

Income Statement(in millions)

2014 20152016

Net Sales329634183983

Cost of Goods Sold211519792510

Selling and General Expenses700812759

Depreciation Expense160298284

Interest Expense90109121

Income Tax Expense195137254

Net Income 36 8355