Please describe the impact of the change in the dividend policy from the point of view of signaling and agency problem Make any assumptions you need to make to support your comment Please work all your calculations in the below pictures , and answer the questions above both quantitatively and qualitatively Cash Acc Receivable Inventory Current Assets Fixed Assets Total Assets Banks (debt) Acc Payable Deferred Taxes Current Liabilities Long Term Debt Total Liabilities Shareholders equity Total Liabilities Net Worth 2015 584 3,928 865 5,377 1,870 7,247 2,027 992 40 3,059 2,010 5,069 2,178 7 247 2015 3801 06 58 2016 634 4,453 922 6,009 1,805 7,814 2,436 951 20 3,407 2,041 5,448 2 366 7,814 2016 4424 26 66 2017 773 4,600 975 6,348 1,741 8 089 2,741 749 9 3,499 2,072 5,571 2,517 8,089 2017 4825 46 69 NWC NWC from sales Growth in NWC Change in WC 2018 5396 67 69 0 1 571 21 2019 6035 49 69 0 1 638 82 2020 6749 91 69 0 1 714 42 2021 7565 41 69 0 05 815 50 2022 8025 17 69 0 05 459 76 2023 8512 87 69 0 05 487 70 2024 9030 20 69 0 05 517 33 2025 9578 97 69 0 05 548 77 2026 10161 08 69 0 05 582 11 2027 10778 56 69 0 05 617 48 623 20 401 19 Sales in Industry Book Value Equity Market Capitalization Debt EV EBITDA Net Income Levered Beta Debt Equity EV EBITDA P E 0 48 0 75 Burger Corp Small Mac Co Fingers Corp Shrimper Corp Clairon Corp Cod Corp Myfish Corp Azuzena Corp 4,050 82 00 65 00 67 00 81 00 10 00 87 00 78 00 56 00 10,080 10,667 10,641 1,752 2,667 5,538 9,429 10,818 25,200 4,800 30 000 32,000 8,000 40,000 18,090 18,090 3,680 370 7,200 3,800 11,000 7,200 6,800 14 000 6 600 6 400 13,000 11,900 3,590 15,490 3,650 4,050 1,990 920 1,200 925 1 100 1,700 2,016 1,920 2,714 800 864 1,152 201 1 25 1 67 2 30 2 70 2 00 1 40 1 87 1 67 Unlevered Beta 0 94 1 10 2 30 2 35 1 00 0 75 1 27 1 36 0 00 0 21 1 43 1 23 0 68 0 33 8 22 9 88 9 09 4 40 9 17 15 14 11 82 9 11 12 50 16 67 6 67 4 60 8 33 6 25 32 84 7 44 1,599 PIE 7 63 Pirce Earnings Net Income Implied Equity value $378 $2,887 52 EV EBITDA EV EBITDA EBITDA 17 Implied EV 9 60 862 49 8282 07 Free Cashflows (Million Euros) Sales EBITDA EBITDA Depreciation EBIT EBIAT Plus depreciation and amortization Less capital expenditure Less changes in working capital Free cash flow Discount factor Present value free cash flows Sum PV free cash flows Terminal growth rate Terminal value PV of Terminal value Enterprise value Net Debt Equity value 2018 7841 12 1181 62 15 07 215 63 965 99 676 19 215 63 235 23 571 21 85 38 0 93 79 47 2390 91 5 29478 07 14393 88 16784 78 4,040 20825 01 2019 8782 05 1323 41 15 07 225 79 1097 62 768 34 225 79 263 46 638 82 91 85 0 87 79 58 2020 9835 90 1482 22 15 07 252 89 1229 34 860 54 252 89 295 08 714 42 103 92 2021 11016 21 1660 09 15 07 283 23 1376 86 963 80 283 23 330 49 815 50 101 05 0 75 75 86 2022 11677 18 1759 70 15 07 300 23 1459 47 1021 63 300 23 350 32 459 76 511 78 0 70 357 62 2023 2024 2025 2026 2027 12377 81 13120 48 13907 71 14742 17 15626 7 1865 28 1977 19 2095 83 2221 58 2354 8 15 07 15 07 15 07 15 07 15 07 318 24 337 34 357 58 379 03 401 7 1547 04 1639 86 1738 25 1842 55 1953 1 1082 93 1147 90 1216 78 1289 78 1367 1 318 24 337 34 357 58 379 03 401 7 371 33 393 61 417 23 442 27 468 487 70 517 33 548 77 582 11 617 4 542 13 574 29 608 35 644 44 682 6 0 65 0 61 0 56 0 52 352 63 347 701 342 85 338 06 333 3 0 81 0 4 83 81 Sales Initial Inventory Purchases Final Inventory COGS Gross Margin Operating Expenses EBITDA Depreciation EBIT Interest Expense Profit Before Tax (PBT) Tax (30 ) Net Income 2015 $6,545 850 3,338 865 $3,323 $3,222 2,114 1,108 192 916 121 $795 239 $557 2016 $6,728 865 3,431 922 $3,374 $3,354 2,363 991 187 804 133 $671 201 $470 2017 $7,001 922 3,571 975 $3,518 $3,483 2,621 862 180 682 142 $540 162 $378 Dividends Paid Retained Earnings 334 03 222 684 281 70 187 80 227 01 151 34 Purchases as sales 51 0 Operating Expenses sales 32 3 EBITDA Margin 16 9 EBIT Margin 14 0 Net Income Margin 8 5 51 0 35 1 14 7 11 9 7 0 51 0 37 4 12 3 9 7 5 4 Capital expenditure Capital expenditure as sale 201 3 1 192 2 9 187 2 7 WACC Rf Rp Weight of Equity t After tax Cost of debt b Corporate spread Kd Weight of Debt WACC unlevered Beta Debt Equity Company's levered beta 2 25 5 75 14 33 42 30 2 44 2 10 1 23 3 48 58 7 43 1 07 1 38 2 10 Cash Acc Receivable Inventory Current Assets Fixed Assets Total Assets Banks (debt) Acc Payable Deferred Taxes Current Liabilities Long Term Debt Total Liabilities Shareholders equity Total Liabilities Net Worth 2015 584 3,928 865 5,377 1,870 7,247 2,027 992 40 3,059 2,010 5,069 2,178 7 247 2015 3801 06 58 2016 634 4,453 922 6,009 1,805 7,814 2,436 951 20 3,407 2,041 5,448 2 366 7,814 2016 4424 26 66 2017 773 4,600 975 6,348 1,741 8 089 2,741 749 9 3,499 2,072 5,571 2,517 8,089 2017 4825 46 69 NWC NWC from sales Growth in NWC Change in WC 2018 5396 67 69 0 1 571 21 2019 6035 49 69 0 1 638 82 2020 6749 91 69 0 1 714 42 2021 7565 41 69 0 05 815 50 2022 8025 17 69 0 05 459 76 2023 8512 87 69 0 05 487 70 2024 9030 20 69 0 05 517 33 2025 9578 97 69 0 05 548 77 2026 10161 08 69 0 05 582 11 2027 10778 56 69 0 05 617 48 623 20 401 19 Sales in Industry Book Value Equity Market Capitalization Debt EV EBITDA Net Income Levered Beta Debt Equity EV EBITDA P E 0 48 0 75 Burger Corp Small Mac Co Fingers Corp Shrimper Corp Clairon Corp Cod Corp Myfish Corp Azuzena Corp 4,050 82 00 65 00 67 00 81 00 10 00 87 00 78 00 56 00 10,080 10,667 10,641 1,752 2,667 5,538 9,429 10,818 25,200 4,800 30 000 32,000 8,000 40,000 18,090 18,090 3,680 370 7,200 3,800 11,000 7,200 6,800 14 000 6 600 6 400 13,000 11,900 3,590 15,490 3,650 4,050 1,990 920 1,200 925 1 100 1,700 2,016 1,920 2,714 800 864 1,152 201 1 25 1 67 2 30 2 70 2 00 1 40 1 87 1 67 Unlevered Beta 0 94 1 10 2 30 2 35 1 00 0 75 1 27 1 36 0 00 0 21 1 43 1 23 0 68 0 33 8 22 9 88 9 09 4 40 9 17 15 14 11 82 9 11 12 50 16 67 6 67 4 60 8 33 6 25 32 84 7 44 1,599 PIE 7 63 Pirce Earnings Net Income Implied Equity value $378 $2,887 52 EV EBITDA EV EBITDA EBITDA 17 Implied EV 9 60 862 49 8282 07 Free Cashflows (Million Euros) Sales EBITDA EBITDA Depreciation EBIT EBIAT Plus depreciation and amortization Less capital expenditure Less changes in working capital Free cash flow Discount factor Present value free cash flows Sum PV free cash flows Terminal growth rate Terminal value PV of Terminal value Enterprise value Net Debt Equity value 2018 7841 12 1181 62 15 07 215 63 965 99 676 19 215 63 235 23 571 21 85 38 0 93 79 47 2390 91 5 29478 07 14393 88 16784 78 4,040 20825 01 2019 8782 05 1323 41 15 07 225 79 1097 62 768 34 225 79 263 46 638 82 91 85 0 87 79 58 2020 9835 90 1482 22 15 07 252 89 1229 34 860 54 252 89 295 08 714 42 103 92 2021 11016 21 1660 09 15 07 283 23 1376 86 963 80 283 23 330 49 815 50 101 05 0 75 75 86 2022 11677 18 1759 70 15 07 300 23 1459 47 1021 63 300 23 350 32 459 76 511 78 0 70 357 62 2023 2024 2025 2026 2027 12377 81 13120 48 13907 71 14742 17 15626 7 1865 28 1977 19 2095 83 2221 58 2354 8 15 07 15 07 15 07 15 07 15 07 318 24 337 34 357 58 379 03 401 7 1547 04 1639 86 1738 25 1842 55 1953 1 1082 93 1147 90 1216 78 1289 78 1367 1 318 24 337 34 357 58 379 03 401 7 371 33 393 61 417 23 442 27 468 487 70 517 33 548 77 582 11 617 4 542 13 574 29 608 35 644 44 682 6 0 65 0 61 0 56 0 52 352 63 347 701 342 85 338 06 333 3 0 81 0 4 83 81 Sales Initial Inventory Purchases Final Inventory COGS Gross Margin Operating Expenses EBITDA Depreciation EBIT Interest Expense Profit Before Tax (PBT) Tax (30 ) Net Income 2015 $6,545 850 3,338 865 $3,323 $3,222 2,114 1,108 192 916 121 $795 239 $557 2016 $6,728 865 3,431 922 $3,374 $3,354 2,363 991 187 804 133 $671 201 $470 2017 $7,001 922 3,571 975 $3,518 $3,483 2,621 862 180 682 142 $540 162 $378 Dividends Paid Retained Earnings 334 03 222 684 281 70 187 80 227 01 151 34 Purchases as sales 51 0 Operating Expenses sales 32 3 EBITDA Margin 16 9 EBIT Margin 14 0 Net Income Margin 8 5 51 0 35 1 14 7 11 9 7 0 51 0 37 4 12 3 9 7 5 4 Capital expenditure Capital expenditure as sale 201 3 1 192 2 9 187 2 7 WACC Rf Rp Weight of Equity t After tax Cost of debt b Corporate spread Kd Weight of Debt WACC unlevered Beta Debt Equity Company's levered beta 2 25 5 75 14 33 42 30 2 44 2 10 1 23 3 48 58 7 43 1 07 1 38 2 10

Question

Please describe the impact of the change in the dividend policy from the point of view of signaling and agency problem  Make any assumptions you need to make to support your comment  Please work all your calculations in the below pictures , and answer the questions above both quantitatively and qualitatively Cash Acc  Receivable Inventory Current Assets Fixed Assets Total Assets Banks (debt) Acc  Payable Deferred Taxes Current Liabilities Long Term Debt Total Liabilities Shareholders equity Total Liabilities   Net Worth 2015 584 3,928 865 5,377 1,870 7,247 2,027 992 40 3,059 2,010 5,069 2,178 7 247 2015 3801 06 58  2016 634 4,453 922 6,009 1,805 7,814 2,436 951 20 3,407 2,041 5,448 2 366 7,814 2016 4424 26 66  2017 773 4,600 975 6,348 1,741 8 089 2,741 749 9 3,499 2,072 5,571 2,517 8,089 2017 4825 46 69  NWC NWC from sales   Growth in NWC Change in WC 2018 5396 67 69   0 1  571 21 2019 6035 49 69   0 1  638 82 2020 6749 91 69   0 1  714 42 2021 7565 41 69  0 05  815 50 2022 8025 17 69  0 05  459 76 2023 8512 87 69  0 05  487 70 2024 9030 20 69  0 05  517 33 2025 9578 97 69  0 05  548 77 2026 10161 08 69  0 05  582 11 2027 10778 56 69  0 05  617 48 623 20 401 19   Sales in Industry Book Value Equity Market Capitalization Debt EV EBITDA Net Income Levered Beta Debt Equity EV EBITDA P E 0 48 0 75 Burger Corp Small Mac Co Fingers Corp Shrimper Corp Clairon Corp Cod Corp Myfish Corp Azuzena Corp 4,050 82 00  65 00  67 00  81 00  10 00  87 00  78 00  56 00  10,080 10,667 10,641 1,752 2,667 5,538 9,429 10,818 25,200 4,800 30 000 32,000 8,000 40,000 18,090 18,090 3,680 370 7,200 3,800 11,000 7,200 6,800 14 000 6 600 6 400 13,000 11,900 3,590 15,490 3,650 4,050 1,990 920 1,200 925 1 100 1,700 2,016 1,920 2,714 800 864 1,152 201 1 25 1 67 2 30 2 70 2 00 1 40 1 87 1 67 Unlevered Beta 0 94 1 10 2 30 2 35 1 00 0 75 1 27 1 36 0 00 0 21 1 43 1 23 0 68 0 33 8 22 9 88 9 09 4 40 9 17 15 14 11 82 9 11 12 50 16 67 6 67 4 60 8 33 6 25 32 84 7 44 1,599 PIE 7 63 Pirce Earnings Net Income Implied Equity value $378 $2,887 52 EV EBITDA EV EBITDA EBITDA 17 Implied EV 9 60 862 49 8282 07 Free Cashflows (Million Euros) Sales EBITDA EBITDA  Depreciation EBIT EBIAT Plus depreciation and amortization Less capital expenditure Less changes in working capital Free cash flow Discount factor Present value free cash flows Sum PV free cash flows Terminal growth rate Terminal value PV of Terminal value Enterprise value Net Debt Equity value 2018 7841 12 1181 62 15 07  215 63 965 99 676 19 215 63 235 23 571 21 85 38 0 93 79 47 2390 91 5  29478 07 14393 88 16784 78 4,040 20825 01 2019 8782 05 1323 41 15 07  225 79 1097 62 768 34 225 79 263 46 638 82 91 85 0 87 79 58 2020 9835 90 1482 22 15 07  252 89 1229 34 860 54 252 89 295 08 714 42 103 92 2021 11016 21 1660 09 15 07  283 23 1376 86 963 80 283 23 330 49 815 50 101 05 0 75 75 86 2022 11677 18 1759 70 15 07  300 23 1459 47 1021 63 300 23 350 32 459 76 511 78 0 70 357 62 2023 2024 2025 2026 2027 12377 81 13120 48 13907 71 14742 17 15626 7 1865 28 1977 19 2095 83 2221 58 2354 8 15 07  15 07  15 07  15 07  15 07 318 24 337 34 357 58 379 03 401 7 1547 04 1639 86 1738 25 1842 55 1953 1 1082 93 1147 90 1216 78 1289 78 1367 1 318 24 337 34 357 58 379 03 401 7 371 33 393 61 417 23 442 27 468   487 70 517 33 548 77 582 11 617 4 542 13 574 29 608 35 644 44 682 6 0 65 0 61 0 56 0 52 352 63 347 701 342 85 338 06 333 3 0 81 0 4 83 81 Sales Initial Inventory Purchases Final Inventory COGS Gross Margin Operating Expenses EBITDA Depreciation EBIT Interest Expense Profit Before Tax (PBT) Tax (30 ) Net Income 2015 $6,545 850 3,338 865 $3,323 $3,222 2,114 1,108 192 916 121 $795 239 $557 2016 $6,728 865 3,431 922 $3,374 $3,354 2,363 991 187 804 133 $671 201 $470 2017 $7,001 922 3,571 975 $3,518 $3,483 2,621 862 180 682 142 $540 162 $378 Dividends Paid Retained Earnings 334 03 222 684 281 70 187 80 227 01 151 34 Purchases as   sales 51 0  Operating Expenses   sales 32 3  EBITDA Margin 16 9  EBIT Margin 14 0  Net Income Margin 8 5  51 0  35 1  14 7  11 9  7 0  51 0  37 4  12 3  9 7  5 4  Capital expenditure Capital expenditure as   sale 201 3 1  192 2 9  187 2 7  WACC Rf Rp Weight of Equity t After tax Cost of debt b Corporate spread Kd Weight of Debt WACC unlevered Beta Debt Equity Company's levered beta 2 25  5 75  14 33  42  30  2 44  2 10 1 23  3 48  58  7 43  1 07 1 38 2 10 Cash Acc  Receivable Inventory Current Assets Fixed Assets Total Assets Banks (debt) Acc  Payable Deferred Taxes Current Liabilities Long Term Debt Total Liabilities Shareholders equity Total Liabilities   Net Worth 2015 584 3,928 865 5,377 1,870 7,247 2,027 992 40 3,059 2,010 5,069 2,178 7 247 2015 3801 06 58  2016 634 4,453 922 6,009 1,805 7,814 2,436 951 20 3,407 2,041 5,448 2 366 7,814 2016 4424 26 66  2017 773 4,600 975 6,348 1,741 8 089 2,741 749 9 3,499 2,072 5,571 2,517 8,089 2017 4825 46 69  NWC NWC from sales   Growth in NWC Change in WC 2018 5396 67 69   0 1  571 21 2019 6035 49 69   0 1  638 82 2020 6749 91 69   0 1  714 42 2021 7565 41 69  0 05  815 50 2022 8025 17 69  0 05  459 76 2023 8512 87 69  0 05  487 70 2024 9030 20 69  0 05  517 33 2025 9578 97 69  0 05  548 77 2026 10161 08 69  0 05  582 11 2027 10778 56 69  0 05  617 48 623 20 401 19   Sales in Industry Book Value Equity Market Capitalization Debt EV EBITDA Net Income Levered Beta Debt Equity EV EBITDA P E 0 48 0 75 Burger Corp Small Mac Co Fingers Corp Shrimper Corp Clairon Corp Cod Corp Myfish Corp Azuzena Corp 4,050 82 00  65 00  67 00  81 00  10 00  87 00  78 00  56 00  10,080 10,667 10,641 1,752 2,667 5,538 9,429 10,818 25,200 4,800 30 000 32,000 8,000 40,000 18,090 18,090 3,680 370 7,200 3,800 11,000 7,200 6,800 14 000 6 600 6 400 13,000 11,900 3,590 15,490 3,650 4,050 1,990 920 1,200 925 1 100 1,700 2,016 1,920 2,714 800 864 1,152 201 1 25 1 67 2 30 2 70 2 00 1 40 1 87 1 67 Unlevered Beta 0 94 1 10 2 30 2 35 1 00 0 75 1 27 1 36 0 00 0 21 1 43 1 23 0 68 0 33 8 22 9 88 9 09 4 40 9 17 15 14 11 82 9 11 12 50 16 67 6 67 4 60 8 33 6 25 32 84 7 44 1,599 PIE 7 63 Pirce Earnings Net Income Implied Equity value $378 $2,887 52 EV EBITDA EV EBITDA EBITDA 17 Implied EV 9 60 862 49 8282 07 Free Cashflows (Million Euros) Sales EBITDA EBITDA  Depreciation EBIT EBIAT Plus depreciation and amortization Less capital expenditure Less changes in working capital Free cash flow Discount factor Present value free cash flows Sum PV free cash flows Terminal growth rate Terminal value PV of Terminal value Enterprise value Net Debt Equity value 2018 7841 12 1181 62 15 07  215 63 965 99 676 19 215 63 235 23 571 21 85 38 0 93 79 47 2390 91 5  29478 07 14393 88 16784 78 4,040 20825 01 2019 8782 05 1323 41 15 07  225 79 1097 62 768 34 225 79 263 46 638 82 91 85 0 87 79 58 2020 9835 90 1482 22 15 07  252 89 1229 34 860 54 252 89 295 08 714 42 103 92 2021 11016 21 1660 09 15 07  283 23 1376 86 963 80 283 23 330 49 815 50 101 05 0 75 75 86 2022 11677 18 1759 70 15 07  300 23 1459 47 1021 63 300 23 350 32 459 76 511 78 0 70 357 62 2023 2024 2025 2026 2027 12377 81 13120 48 13907 71 14742 17 15626 7 1865 28 1977 19 2095 83 2221 58 2354 8 15 07  15 07  15 07  15 07  15 07 318 24 337 34 357 58 379 03 401 7 1547 04 1639 86 1738 25 1842 55 1953 1 1082 93 1147 90 1216 78 1289 78 1367 1 318 24 337 34 357 58 379 03 401 7 371 33 393 61 417 23 442 27 468   487 70 517 33 548 77 582 11 617 4 542 13 574 29 608 35 644 44 682 6 0 65 0 61 0 56 0 52 352 63 347 701 342 85 338 06 333 3 0 81 0 4 83 81 Sales Initial Inventory Purchases Final Inventory COGS Gross Margin Operating Expenses EBITDA Depreciation EBIT Interest Expense Profit Before Tax (PBT) Tax (30 ) Net Income 2015 $6,545 850 3,338 865 $3,323 $3,222 2,114 1,108 192 916 121 $795 239 $557 2016 $6,728 865 3,431 922 $3,374 $3,354 2,363 991 187 804 133 $671 201 $470 2017 $7,001 922 3,571 975 $3,518 $3,483 2,621 862 180 682 142 $540 162 $378 Dividends Paid Retained Earnings 334 03 222 684 281 70 187 80 227 01 151 34 Purchases as   sales 51 0  Operating Expenses   sales 32 3  EBITDA Margin 16 9  EBIT Margin 14 0  Net Income Margin 8 5  51 0  35 1  14 7  11 9  7 0  51 0  37 4  12 3  9 7  5 4  Capital expenditure Capital expenditure as   sale 201 3 1  192 2 9  187 2 7  WACC Rf Rp Weight of Equity t After tax Cost of debt b Corporate spread Kd Weight of Debt WACC unlevered Beta Debt Equity Company's levered beta 2 25  5 75  14 33  42  30  2 44  2 10 1 23  3 48  58  7 43  1 07 1 38 2 10

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Please describe the impact of the change in the dividend policy from the point of view of signaling and agency problem. Make any assumptions you

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