New Problems 1. (10 pts) Suppose an all-equity firm has $1m in book assets (B) to start. Expected Net Income forecast are as in the table. The number of shares in the firm is 1000. Assume that the dividend payout rate remains constant at .5. Fill in the following table. Show your work. a. 1 2 3 4 5 B Year Total Assets @ start of period Net Income 1,000,000 20,000 B 20,200 19,382 19,566 19,752 B B B B ROA ROE Dividends Investment Total Assets @ end of period EPS DIV per Share B B B b. Assuming that the discount rate = 10%. What is the price per share (P) today. C. What are the growth rates of dividends each year? d. What is the PVGO? e. What is the market value of the firm today? Market to book value ratio today? f. If the firm purchases a machine worth $2500 today with 5 years of expected life and no salvage value, how much depreciation would be in net income in year 1. Assume depreciation is straight line. What is the free cash flow in year 1 assuming no change in working capital