Four Seasons Total Landscaping is an all-equity firm that has been in existence for the past three years. Company management expects that the company will last for two more years and then be dissolved. The company will generate a free cash flow of $648,000 one year from today and then its final free cash flow of $991,440 two years from today. This second cash flow incorporates all of the proceeds from the liquidation process. Assume that the current dividend policy of the firm is to pay out all available free cash flow each year to its shareholders. There are 50,000 shares outstanding and the shareholders currently require a return of 8% per annum.

A) What should be the current price per share of Four Seasons Total Landscaping?2 decimal places.

The board of directors of Four Seasons Total Landscaping is dissatisfied with the current dividend policy and proposes that a $1,080,000 dividend be paid one year from today (i.e. at t=1). To raise the extra cash needed necessary for the increased dividend, the company will sell new shares at t=1 in order to immediately pay out the proceeds to the existing shareholders as the board of directors' desired dividend.

B) How much extra funding does Four Seasons Total Landscaping need to raise at t=1 through the new share sale in order to have enough funds to pay the increased dividend to the existing investors?

C) What must be the total value at t=1 of both the existing shares and the newly issued shares together? It may be helpful to remember that, at that time, the only remaining cash flow will be the final liquidating t=2 cash flow of one year later.

D) How many new shares must be sold at t=1t=1 to new investors to raise the required funds needed for this increased dividend at t=1 paid to existing investors?

E) What price per share do those new investors pay for their new shares at t=1?

Assume that Four Seasons Total Landscaping commits to the above increased t=1dividend plan (and corresponding share sale) and announces this plan to the public at t=0 (today).

F) What price per share would investors now be willing to pay at t=0 for the existing 50,000 shares after the announcement?