Corporate finance question in the attached image$($#$3)$

3) Fishman Catering hosts the birthday party for Dean Blount each year at the Allen Center. The project requires an investment of $800 each year and generates an expected cash flow of $1 ,600 the following year. The actual cash flow can be as high as $2,000 and as low as $1,200. It will vary for idiosyncratic reasons (more out of town alumni come when his birthday falls on a weekend) and systematic reasons (more alumni come when the economy is doing well and they have more discretionary income). The success of this year's birthday celebration is uncorrelated with next year's birthday celebration. The project is taken every year. The discount rate for the project is 10% and is based on a risk-free rate of 0.8% and a project of 1.08. Fishman catering has 800 shares outstanding and no debt. A) B) C) D) After taking the investment project this year and paying out all free cash flow as a dividend, what do you expect the value of Fishman Catering's equity to be? This is the number of shares times the price per share. Although the economy was poor this year and the stock market fell, a surprisingly large number of alumni were able to attend Dean Jacob's party. Thus the profits were higher than expected at $1,900. After investing the required $800, the remaining cash will be paid out as a dividend. When the dividend is announced, how much (if any) will the price of Fishman Catering's equity rise or fall? Explain completely. Assume that none of the shareholders attended this year's birthday party, so they are not aware of this year's profits prior to the dividend announcement. When Fishman Catering announced the higher earnings, they also announced that they would not be paying out the full $1,100 as a dividend. They are going to retain $760 to invest in a new side business and pay out the remaining cash. They are prmting birthday T-shirts for next year's party. The T-shirts are pre-ordered and paid for by alumni, so Fishman Catering is guaranteed a payment of $800 next year on their investment. How does the return on this project compare to Fishman Catering's costs of capital, i.e. the discount rate they use for evaluating their other projects? By how much does reducing the dividend payment to shareholders by $760 and investing in the new (T-shirt) project change the wealth of Fishman Catering's shareholders?