Sakura Group has been engaged in the process of forecasting its financing needs over the next years. The following is a forecast revenue:

Sakura's cost is equal to 52 percent of revenue. Every year, the firm will receive a dividend of RM28,500 from investment in property. The company pays RM365,080 each year for wages. Administrative expenses is RM90,700 for the first 4 years.

However, the firm predict that there are a financial distress and profit reduction of 38 percent that will be 34 percent in cost each year. Thus, the firm has purchased an insurance policy as follows:

(i) Coverage will be 78.9 percent of losses for next 3 years and 90.7 percent in the following years.

(ii) Premium loading is RM11,500 for the first year, decrease by 2 percent for next 2 years and increase by 1.5 percent thereafter.

The risk premium for Sakura Group is 2.8 percent and risk-free rate is 4.2 percent.

Based on the information above:

(a)Calculate the expected cash flow and share price for Sakura.

(b) Sakura Group has engaged on the pharmaceutical company that commonly produce healthcare supplies. The company may deal in generic or brand medication and medical devices that will lead the employee into any unexpected exposure in the future, therefore Sakura decided to purchase the insurance. Explain why the Sakura manage their risk by purchase the insurance policy and discuss the effect of insurance in the cash flow.

(c) Sakura has invited the guest speaker from AIA Insurance, Mr. Mike to talk about the awareness on insurance among employees. At the end of session, Mr. Mike has distributed a feedback survey about the talk and insurance awareness. However, there are a few employees are not subscribed to any insurance policy. Justify the factors that influence the employees are not purchase the insurance.