Yu grdutd frm th univrsity fiv yrs g nd sin thn yu hv bn wrking t th ffrdbl rs mpny () In. Th In. is n mrin multintinl utmbil mnufturr. Th mpny ws fundd lmst 100 yrs g. It is th snd-lrgst USbsd utmkr nd th fifth-lrgst in th wrld. Yu ttnd th mting with th hif finnil ffir, Bn, nd th hif prting ffir, Jn. Jns grup is plnning t lunh nw r.

Th In. lrdy hs tw luxury sprts brnds nd thr ffrdbl fmily rs n th mrkt. This nw r will b mr ffrdbl sprts r. Jn lld this mting t g vr th lng-witd mrkt rsrh rprt fr this ffrdbl sprts r mdl mmissind frm th Mrkts-R-Us mpny nd dlivrd ystrdy. rding t this rprt, thr is nih fr n ffrdbl sprts r. Hwvr, this nih will b filld by th mpnys mptitrs in fiv yrs. Thrfr, Jn thinks tht th mpny n prdu nd sll ths ffrdbl sprts rs fr th nxt fiv yrs withut ny mptitin nd thn trmint th prjt whn th mptitrs mv int th mrkt. Th hs t py $5,000,000 fr this mrkt rsrh rprt t th nd f th mnth.

Th will hir n xtrnl dsign tm fr this nw mdl nd py $6,000,000 fr thir srvis if th mpny dids t prdu th nw mdl. Bn rmmnds using th building wnd by th mpny s th prdutin fility fr this nw mdl. Th mpny hs bn rnting this building fr $10,000,000 pr yr t its nighbr firm fr th pst svrl yrs. Bn tlkd t th tnnt bfr th mting nd lrnd tht th tnnt wuld lik t ntinu rnting this building fr th fllwing 5 yrs.

Th rprt shws tht this nw sprts r mdl n b sld fr $60,000 pr r this yr. Th pri f this r will inrs by 2% infltin vry yr. Th mpny n sll 50,000 rs pr yr during th nxt 5 yrs. Th vribl prdutin sts r xptd t b 75% f th sls rvnu. In dditin t ths vribl prdutin sts, thr will b $100,000,000 fixd sts vry yr.

Th In. hs t buy nw mhin t prdu th nw mdl whih sts $1,000,000,000. Shipping, insurn nd instlltin sts will b 5% f th quisitin st. This mhin will b dpritd t vlu f 0 by stright-lin dpritin mthd vr 6 yr prid. Th mpny n sll this mhin fr $100,000,000 t th nd f 5 yrs.

n imprtnt pint is tht this nw mdl will fft th sls f Mdl X20, nthr ffrdbl r prdud by th mpny. Sls f Mdl X20 will drs by 10,000 units pr yr fr th nxt 5 yrs. Th xisting mdl is slling fr $50,000 nw nd its pri is ls xptd t inrs with infltin vry yr. Th vribl prdutin sts fr Mdl X20 r ls 75% f its sls rvnu. Th fixd prdutin sts f this mdl r $50,000,000 pr yr.

T prdu this nw sprts r mdl, th mpny hs t rry n invntry f prts qul t 10% f th sls rvnu f th nw mdl in th fllwing yr. Similrly, will hv n inrs in its unts pybls qul t 5% f th sls rvnu f th nw mdl in th fllwing yr.

Th In. hs bth mmn stk nd prfrrd stk utstnding.

mmn Stk - 1 millin shrs f mmn stk r utstnding. Sin it is n ld nd stblishd firm, th mpny hs pid dividnds vry yr inluding tdy. Hwvr, t finn th invstmnt in this nw prjt, th dids nt t py ny dividnds fr th nxt 3 yrs. t th nd f yr 4, th mpny will py dividnd f $2.2 pr shr. Frm thr n, th mpny's dividnds r xptd t grw t 25% pr yr fr th fllwing 3 yrs, nd t 6% pr yr frvr thrftr. nlysts rgu tht invstrs wuld rquir rturn f 18% fr th fllwing 5 yrs nd 13% thrftr frvr.

Prfrrd Stk 250,000 shrs f umultiv prfrrd stk r utstnding. Th mpny pys dividnds f $3.1 pr shr vry yr inluding tdy. Hwvr, t finn th invstmnt in this nw prjt, th dids nt t py ny dividnds fr th fllwing 3 yrs t its prfrrd stkhldrs s wll. t th nd f yr 4, th mpny will ntinu t py nnul dividnds f $3.1 pr shr vry yr. nlysts stimt tht invstrs rquir rturn f 12% frm this invstmnt.

1. Givn ll this infrmtin,
   1. lult th pri t whih In.s mmn stk n trd in th mrkt tdy.
   2. lult th pri t whih In.s umultiv prfrrd stk n trd in th mrkt tdy.
2. Supps 4 yrs hv pssd. Hlding vrything ls nstnt,
   1. lult th vlu f In.s mmn stk nw.
   2. lult th vlu f In.s prfrrd stk nw.