Question 5 (7 marks)

You are working for Heavy Industry Exports Group.Your corporation is going to pay an annual dividend of $8 per share and extra dividend of $2.5 per share in 4 weeks. The company's stock is currently listed and actively traded on ASX.

Equipment. Ltd is a subsidiary of Heavy Industry Exports Group and currently under the liquidation plan due to the severe contraction of operation due to corona virus. The company plans to pay total dividend of $4.5 million now and $ 9.5 million one year from now as a liquidating dividend.

Required:

1. The standard process of settlement in ASX is T+2. If today is the ex-dividend date for Heavy Industry Exports Group, when is the record date for dividend payment? Calculate the ex-dividend price today if the corporation's closing price yesterday was $53.5, assuming the dividend flat tax rate is 15%. (2 marks)
2. Heavy Industry Exports Group needs to make a payment of AUD 445,000 to a partner in Tokyo. If the direct quote of Japanese Yen in Sydney is 0.004852, how much Japanese Yen the partner in Tokyo will receive? (1 mark)
3. Heavy Industry Exports Group has an extra cash of A$245,000. The AUD/USA exchange rate in New York is 0.75679. The USD/AUD rate in Sydney is 1.37137. Is there any arbitrage profit possible? Set up an arbitrage scheme with the extra cash. What is the potential gain in AUD dollar, disregarding bid-ask spread? (2 marks)
4. Calculate the current value of the Equipment Ltd's equity in total and per share if the firm has 2.5 million shares outstanding. The required rate of return for shareholders is 12%. (2 marks)