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5. (5 points) CEO of Biotech Ltd is entitled to receive cash bonus if company delivers positive net ROA. The firm has 10,000,000 shares outstanding

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5. (5 points) CEO of Biotech Ltd is entitled to receive cash bonus if company delivers positive net ROA. The firm has 10,000,000 shares outstanding with market price of $29 per share. Its projected dividend one year from now is $1.74. Afterwards, the dividends are expected to grow at 4% rate. The firm also has 50,000 bonds traded with market price of $950. The bonds carry 5% coupon rate paid on annual basis, have face value of $1000, and mature in 10 years. Corporate tax rate is 35%. What should be the minimum ROA CEO needs to deliver in order to be entitled for cash bonus? Explain and show your calculations

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