Determine the value of one ordinary share of Carter & Briggs using: Discounted free cash flows method. To assist you with the task, the following information is provided: During Year 0, dividends proposed and paid were £120m Number of ordinary shares remains stable = 500m Dividends annual growth rate to perpetuity = 4% Carter & Briggs’s WACC is 10%, while its cost of ordinary share capital is 12% Sales revenue for Year 0 = £1,200m Carter & Briggs will experience abnormal growth of sales revenue for the next five years = 16% p.a., which is followed by stable perpetual growth at 12% p.a. Operating profit margin will remain constant at 18% of sales revenue Corporation tax is stable = 30% Annual additional working capital investment over the next six years will be 7% of annual sales growth Annual additional non-current asset investment over the next six years will be 10% of annual sales growth Long-term debt is currently = £843m Sustainable growth rate from Year 6 is 2%

Determine the value of one ordinary share of Carter & Briggs using: Dividend valuation method.  To assist you with the task, the following information is provided: During Year 0, dividends proposed and paid were £120m Number of ordinary shares remains stable = 500m Dividends annual growth rate to perpetuity = 4% Carter & Briggs’s WACC is 10%, while its cost of ordinary share capital is 12% Sales revenue for Year 0 = £1,200m Carter & Briggs will experience abnormal growth of sales revenue for the next five years = 16% p.a., which is followed by stable perpetual growth at 12% p.a. Operating profit margin will remain constant at 18% of sales revenue Corporation tax is stable = 30% Annual additional working capital investment over the next six years will be 7% of annual sales growth Annual additional non-current asset investment over the next six years will be 10% of annual sales growth Long-term debt is currently = £843m Sustainable growth rate from Year 6 is 2%

PLEASE START FROM SECTION B Use the following information about SV Inc. to calculate the company’s Cost of Capital. The stock of SV Inc. sells for $50, and last year’s dividend was $2.10. A flotation cost of 10% would be required to issue new common stock. SVs’ preferred stock pays a dividend of $3.30 per share, and new preferred could be sold at a price to net the company $30 per share. Security analysts are projecting that the common dividend will grow at a rate of 7% a year. The firm can issue additional long-term debt at an interest rate (or a before-tax cost) of 10%, and its marginal tax rate is 35%. The market risk premium is 6%, the risk-free rate is 6.5%, and Supreme Ventures’ beta is 0.83. In its cost-of-capital calculations, SV Inc. uses a target capital structure with 45% debt, 5% preferred stock, and 50% common equity.   REQUIRED: Section A  Calculate the cost of each capital component: the after-tax cost of debt  the cost of preferred stock (including flotation costs)…

Net profit of Harper Holding Ltd in the current year is $3,546,000. The company is planning to launch a project that will requires an investment of $1,045,000 next year. Today the company’s stock has market value of $72/share. Harper Holding Ltd has the current capital structure of 65% in equity and 35% in debt. Required:a. How much dividend can Harper Holding Ltd pay its shareholders this year and what is dividend payout ratio of the company. Assume the Residual Dividend Payout Policy applies. b. The company is paying a cash dividend of $5.50/share plus an extra-cash dividend of $2.5/share. Tomorrow the stock will go ex-dividend. Calculate the ex-dividend price tomorrow morning. Assuming the tax on dividend is 15%? c. M&T Ltd. is a daughter company of the Harper Holding and currently under a liquidation plan due to severe business contraction. The company plans to pay total dividend of $8.5 million now and $ 12.5 million one year from now as a liquidating dividend. The required…