Section A (30%) - Case Study Analysis Answer ALL questions in this section. TwoBoxes Thanks Company (TBT) is engaged in manufacturing and selling surgical masks. Wilson, a senior research analyst of XBY Investment Bank, prepares financial statements forecast shortly after TBT announced the annual result in 2019. The latest and forecasted of financial statements are shown as below (all in $ mil.): TBT Company Income Statement 2019 2020E 6,986 4,192 2021E 8,034 5,589 3,568 2022E 8,436 5,062 4,981 2,794 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 2,021 383 1,638 400 138 3,053 458 2,595 325 2.270 908 1,362 2,394 294 2,100 840 1,260 3,374 524 2,850 350 2,500 1,000 1,500 1,500 600 900 400 450 500 975 Dividend *E= Estimated Cash Accounts Receivables Non-current Assets Total Assets TBT Company Consolidated Statement of Financial Positions 2019 2020E 850 950 1,456 1,598 1,358 2,020 3,664 4,568 2021E 1,250 1,786 3,717 6,753 2022E 1,568 1,958 5,252 8,778 1,441 Total Liabilities Total Shareholders' Equity 2,223 3,664 1,535 3,033 4,568 1,858 4,895 6,753 1,058 7,720 8,778 *E= Estimated Section A (Continued) Additional Information about the Company and the market: Standard deviation of TBT stock's returns: 35% Standard deviation of market returns: 20% No. of common shares outstanding: 500 million Risk-free rate: 2% Expected market return: 12% Correlation of TBT stock return with market return: 0.8 Wilson plans to use the Two-stage Dividend Discount Model to evaluate the share price of TBT Company, assuming constant dividend growth from Year 2022 onwards. Required: (a) Calculate the following figures: Sustainable growth rate based on financial data in 2022. [rounded to 4 decimal places) (3 marks) the appropriate discount rate (4 marks) (iii) the justified share price of the Company (7 marks)