1) Largecorp Industries pays out all its earnings as dividends and has the share price= $24. To increase, Kirkevue declares it will cut its dividend payments from $2.00 to $1.80 per share and reinvest retained funds. Determine the growth rate that must be achieved on reinvested funds to keep equity cost of capital unchanged?
2) Cameron Industries is buying new chemical vapour depositor in to make silicon chips. It will cost $6 million to purchase machine and $10,000 to have it delivered and installed. Making a clean room in plant for machine will cost extra $3 million. Machine is expected to increase gross profits by $4 million per year, starting at the ending of first year, with related costs of $1 million for each of those years. Machine is expected to have working life of six years and will be reduced over those 6 years. Corporate tax rate= 30%. Determine incremental free cash flows related with new machine in year 1?
3) Look through your local newspaper and discover the results of the survey or interview about any topic. Sum up what the results are and perform the best job you can explaining how researchers who were involved, or authors of survey, came to conclusions that they did. It may or may not be evident. Once you have some idea of what they did, attempt to guess as to what other methods the similar information might be gathered, organized, and summarized.