Description
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? Q2. What is Stock repurchase? Explain the four ways to implement stock repurchase. 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. Q4. What do you mean by Long term financial planning? Take an example and explain the sales percentage model of financial planning.
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المملكة العربية السعودية
وزارة التعليم
الجامعة السعودية اإللكترونية
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment 2
Corporate Finance (FIN-201)
Due Date: 28/10/2023 @ 23:59
Course Name: Corporate Finance
Student’s Name:
Course Code: FIN-201
Student’s ID Number:
Semester: First
CRN: 11690
Academic Year: 2023/24
For Instructor’s Use only
Instructor’s Name: Dr Firoz Alam
Students’ Grade:
/Out of 10
Level of Marks: High/Middle/Low
General Instructions – PLEASE READ THEM CAREFULLY
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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)
Answers:
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