Hello,

I was wanting to know if you can please answer these questions?

Cheers Lucinda

Question 1: 1xFDA5x - This will need to be your question heading for Question 1. Assume a twoperiod world, perfect certainty. and perfect capital market. A rm has an initial endowment of $76 million. The rm has identied the following available investment opportunities: Proposal Period~0 Outlay Period-1 Return L $9.13 million $10.81 million M $10.74 million $12.22 million N $13.99 million $15.93 million P $12.42 million $13.86 million Q $19.49 million $22.29 million These are not divisible projects, which cannot be invested in a fraction (the rm must invest 100 percent of each proposal or none of it]. Assume that the average market rate of return is 12.1 percent. ii} Which projects will the rm undertake to maximise the value of the rm? iii) if the rm undertakes projects that will maximise the value of the rm, how much money will it invest in periodio (now)? liiil What period0 dividend will be paid to shareholders (owners)? liv] Does the rm need borrowing in period0? if yes, how much? iv} What will the period1 (next) dividend be? lvi] What is the Present Value (PV) of period1 returns from optimum investment in (ii)? (vii) What is the Net Present Value (NPV) from optimum investment in (ii)? iviii) How will the value of the rm change due to the decision of optimum investment in (ii)? {ix} How would your answers from ii) to (viii) above change if the rm had an initial endowment of $17 million only? Question 2: 2xDAC6x - This will need to be your heading for Question 2. A rm has multiple net cash inow return options from an investment of $22 million. Find the best option that would be aligned with the principal goal of Financial Management. Show your calculations to support your selection. The required rate of return for the rm is 12.51 percent. Option (i): Cash inows at the end of Year-1 $6 million, Year-4 $13 million and Year-5 $10 million; Option iii]: Cash inows of $5.26 million at the beginning of each year for the next 4 years; Option (iii): Cash inows of $1.34 million at the end of each quarter for the next 5 years; Option (iv): Cash inows of $5.87 million at the end of each year for the next 6 years; Option (v): Cash inows of $0.36 million at the end of each month that will continue forever. Question 3: 37FCB75 - This will need to be your heading for Question 3. A mortgage loan of $4.7 million is to be paid in 26 years using equal monthly payments and the interest rate is 5.38 percent. What would be the monthly payment? After 6 years: the interest rate decreases by 1.3 percent. (a) What would be the new monthly payment? (b) is there any financial benet of paying weekly rather than monthly installments? Explain using your own words. (max 100 words) Question 4: 45CEF81 - This will need to be your heading for Question 4. A bond with 28-year maturity was issued 3 yea rs ago. The face value of this 10.48% semi-annual coupon paying bond is $5,000. Analysts nd that the current yield to maturity of this bond is 12.03 percent. Show your workings and nd the value of this bond. Compare this value against the face value of the bond and write your comment to explain the difference, if any. (Use max 100 words for the explanation]. Question 5: SxDBC9x - This will need to be your heading for Question 5. The company has issued 8 million ordinary shares. It has just paid a dividend of $4 million. That dividend is expected to grow at a rate of 29 percent per annurn for the next three years, then at a rate of 15 percent in the 4th year and at a rate of 3.3 percent per annum forever after that. Assuming a required rate of return of 13.21 percent, calculate the current market price of the share. Explain the difculties of calculating the intrinsic value of the share (Use a max of 200 words for the explanation]. [End of questions]