Everlast Corporation is expecting to pay $0.66 in dividends at the end of the year. The company pays half-yearly dividends and they do not expect the dividends to increase. Today the company's stock price is $11. Calculate the effective annual return on equity implied by the price, giving your answer as a % correct to 2 decimal places

Unsworth Investments is offering securities that will promise to pay investors a quarterly distribution of $0.10 and is expected to grow at 0.5% per quarter. The first distribution is in three months' time. Calculate the fair value of this security if the market prices it at 10% p.a. Give your answer correct to the nearest cent.

Explain two factors that may impact on the return on equity for a company.

A company can invest in building a factory that will cost $75m. The factory is expected to deliver $30m of net revenue for the first four years and then $40m in the next four years. The factory will be expected to have a salvage value of $3m and is depreciated using the straight line method. The risk-adjusted discount rate is 17% p.a.

a) What is the definition of the risk-adjusted discount rate in the context of this project? (0.5 marks)

b) Calculate the free cashflows for years 1 to 8 in millions of dollars. (2 marks)

c) Calculate the net present value in millions of dollars correct to 3 decimal places and interpret your answer. (1.5 marks)

d) Calculate the discounted payback period in years correct to two decimal places. (1 mark)

e) What will happen to the internal rate of return if the risk-adjusted discount rate of the project decreases to 15% p.a. and everything else is constant? (1 mark)

National Foods Limited reported a Net Profit After Tax of $50m for the year. Explain one factor that may determine how much dividends they will pay their shareholders for this year.