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Unique Corp Ltd is a manufacturer of smart phone. John, the CEO of Unique Corp, has been aware of an acquisition opportunity in the market.

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Unique Corp Ltd is a manufacturer of smart phone. John, the CEO of Unique Corp, has been aware of an acquisition opportunity in the market. The target firm, Stardust Tech, designs and manufactures mobile devices. Its new product, Uranus phone, is well received by the market. Financial analysts forecast that, as a result of the success of the new product, Stardust Tech stock's dividend is expected to grow at 16% p.a. for the next two years. Thereafter, the dividend is expected to grow at 10% p.a. because new competitors are expected to enter the market and the growth of sales of Uranus phone will slow down. The current dividend is $4. John is now considering purchasing the shares of target firm. John seeks for your advice on this issue. d. Instead of purchasing the target firm's shares in the market, what is (are) possible action(s) that Unique Corp can take? Please discuss in detail. (8 marks) e. After reviewing the target firm's balance sheet, John found that the target firm had a rela- tively high amount of debt in its capital structure. On the other hand, the target firm also made a net loss in the last financial year. He worries that the target firm will become a financial burden to Unique Corp after it is acquired. As John's financial advisor, do you recommend the potential acquisition? (8 marks)

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