Question C1 Bull Company (BC) is engaged in milk production in New Zealand. Milky, a research analyst of GoGoGo Fund Company, prepares financial statements forecast shown as below (all in $ million.): Bull Company Income Statement 2019 2,589 1,869 720 2020E 3,156 2,249 907 Total revenues Operating costs and expenses Earnings before interest, taxes, depreciation and amortization Depreciation and amortization Operating profit Interest expense Profit before taxes Tax (40%) Profit for the year 120 600 100 500 200 300 157 750 120 630 250 380 120 152 Dividend *E = Estimated Bull Company Consolidated Statement of Financial Positions 2019 2020E Cash 566 798 Accounts Receivables 1,869 2,269 Non-current Assets 3,569 3,559 Total Assets 6,004 6,626 Total Liabilities Total Shareholders' Equity 1,806 4,198 6,004 2,200 4,426 6,626 *E - Estimated Additional Information about the Company and the market: No. of common shares outstanding: 400 million Discount rate: 10% Market value of debt is the same as its book value. Required: (a) Assuming constant perpetual growth model is adopted, (i) Calculate the sustainable growth rate based on financial data in 2020. [rounded to 4 decimal places (3 marks) (ii) Calculate the justified share price of the Company, (3 marks) (iii) Identify and explain briefly TWO methods suggested to operation managers of Bull Company to enhance sustainable growth rate on operation level. (4 marks) (b) Calculate the justified share prices of Bull Company by adopting the following industry average price ratios: (i) Industry P/E ratio is 10. (2 marks) (ii) Industry EV/EBITDA is 6.5