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)

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