Corporate Finance

/in /by
Kingdom of Saudi Arabia Ministry of Education Saudi Electronic Universityالمملكة العربية السعودية وزارة التعليم الجامعة السعودية الإلكترونية  

                          College of Administrative and Financial Sciences

Assignment 2

Corporate Finance (FIN-201)

Due Date: 

Course Name: Corporate FinanceStudent’s Name:
Course Code: FIN-201Student’s ID Number:
Semester: First CRN:  13958
Academic Year:
 

For Instructor’s Use only

Instructor’s Name:          Dr. Samreen Akhtar
Students’ Grade:      /Out of 10Level of Marks: High/Middle/Low

General Instructions – PLEASE READ THEM CAREFULLY

  • The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
  • Assignments submitted through email will not be accepted.
  • Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
  • Students must mention question number clearly in their answer.
  • Late submission will NOT be accepted.
  • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
  • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).
  • Submissions without this cover page will NOT be accepted.

Answer the following questions:

Q1. What are the different ways available for the corporations to distribute income among the shareholders? Suppose a firm promises to pay dividends of $200,000 every year in perpetuity with 200,000 shares outstanding. Assume a discount rate of 11.1%. What is the present value of one of the firm’s shares?                               (2 marks)       

Q2. What is Stock repurchase? Explain the four ways to implement stock repurchase.

(3 marks)

Q3.  Calculate the rate at which a firm can grow without changing its leverage if its payout ratio is 30%; equity outstanding at the beginning of the year is $9,500,000; and its net income for the year is $2,000,000.                                                                                        (2 marks)

Q4. What do you mean by Long term financial planning? Take an example and explain the sales percentage model of financial planning.                                                                            (3 marks)