corporate finance answers please

(1) Muggie Pvt has an opportunity to develop new technology in its area of interest. It is forecasted that within four (4) years of introduction, other innovations will render the technology obsolete. Furthermore, four years from introduction, there will be uncertainties in the environment. The annual demands are as follows: The initial cost of this investment is $2 million payable immediately. The estimated selling price at current price is $15 per unit and unit variable cost is 30% of the selling price in the first year. Operational costs are expected to increase annually by 8% from year two. Selling price is expected to increase by 11% per year. Annual incremental fixed costs are estimated at $1 million from the first year. Muggie Pvt has 11.8 million $50 shares trading at $250 each and bonds with book value $11 million. The market value of bond is $1,190 per $1000 par value. The 13% bonds are irredeemable. Muggie Pvt's capital structure is unlikely to change significantly following the proposed investment. Kandi Co is developing a technology device including the production of similar to the one being considered by Muggie Pvt. Kandi CO's overall equity beta is 1.35, and it is estimated that the equivalent equity beta for production of computer storage device is 1.10. Kandi Co has 300 million $25 shares in issue trading at $220 each. It's debt finance is a $5 million 7% par value which is redeemable in seven (7) years. Kandi Pvt. is financed by 75% equity and 25% debt. The risk free rate is 5% and market return is 15%. Both companies pay annual corporation tax at a rate of 30%. All values are cum-interest/dividend unless otherwise stated. (a) Calculate the current weighted average cost of capital for Muggie Pvt and Kandi Co. Use the WACC formula. (10 Marks) Muggie Pvt and Kandi Co both maintain a low but constant dividend per share. The company regularly offers Scrip dividends and shareholder concessions as an alternative to cash dividend. (b) in a page examine the effect of dividends on shareholders' wealth in the light of dividend irrelevance and dividend relevance theories in both companies. (4 Marks) (c) in a page for both i and ii Discuss how Muggie Pvt or Kandi Co could benefit by offering their shareholders the following alternative to a cash dividend: i. Scrip/ stock dividends (3 Marks) ii. Shareholders concessions ( 3 Marks) (1) Muggie Pvt has an opportunity to develop new technology in its area of interest. It is forecasted that within four (4) years of introduction, other innovations will render the technology obsolete. Furthermore, four years from introduction, there will be uncertainties in the environment. The annual demands are as follows: The initial cost of this investment is $2 million payable immediately. The estimated selling price at current price is $15 per unit and unit variable cost is 30% of the selling price in the first year. Operational costs are expected to increase annually by 8% from year two. Selling price is expected to increase by 11% per year. Annual incremental fixed costs are estimated at $1 million from the first year. Muggie Pvt has 11.8 million $50 shares trading at $250 each and bonds with book value $11 million. The market value of bond is $1,190 per $1000 par value. The 13% bonds are irredeemable. Muggie Pvt's capital structure is unlikely to change significantly following the proposed investment. Kandi Co is developing a technology device including the production of similar to the one being considered by Muggie Pvt. Kandi CO's overall equity beta is 1.35, and it is estimated that the equivalent equity beta for production of computer storage device is 1.10. Kandi Co has 300 million $25 shares in issue trading at $220 each. It's debt finance is a $5 million 7% par value which is redeemable in seven (7) years. Kandi Pvt. is financed by 75% equity and 25% debt. The risk free rate is 5% and market return is 15%. Both companies pay annual corporation tax at a rate of 30%. All values are cum-interest/dividend unless otherwise stated. (a) Calculate the current weighted average cost of capital for Muggie Pvt and Kandi Co. Use the WACC formula. (10 Marks) Muggie Pvt and Kandi Co both maintain a low but constant dividend per share. The company regularly offers Scrip dividends and shareholder concessions as an alternative to cash dividend. (b) in a page examine the effect of dividends on shareholders' wealth in the light of dividend irrelevance and dividend relevance theories in both companies. (4 Marks) (c) in a page for both i and ii Discuss how Muggie Pvt or Kandi Co could benefit by offering their shareholders the following alternative to a cash dividend: i. Scrip/ stock dividends (3 Marks) ii. Shareholders concessions ( 3 Marks)