Question: please help me solve this fast. thanks ) Bright Ltd is an all equity firm with assets of $2,000,000, held in cash and has decided

please help me solve this fast. thanks
) Bright Ltd is an all equity firm with assets of $2,000,000, held in cash and has decided not to borrow any extra funds. Bright Ltd is considering the following five proposals. Any money not invested in a project will be returned to the shareholders immediately. Proposal Outlay - Now ($) Next Year's Return (Expected Cash Inflows) ($) 1 500,000 515,000 2 500,000 533,000 3 500,000 550,000 4 500,000 545,000 5 500,000 530,000 Assume a two-period certainty model where the market rate of interest is 8%. a. Explain which proposals the company should undertake. 1 Mark b. Ernie holds 10% shares of the company. If the company follows your advices from part (a) calculate how much dividend will Ernie receive from Bright Ltd now and in next year? (Show answers correct to two decimal places) 2 Marks c. Assume Ernie has no other income. Ernie wants to consume $20,000 now and $40,000 one year later. He also wants to and buy a property priced $90,000 today and a caravan priced $50,000 one year later. Explain with calculation how he can rearrange his income so he can do all he wants. (Show answer correct to two decimal places.) ) Bright Ltd is an all equity firm with assets of $2,000,000, held in cash and has decided not to borrow any extra funds. Bright Ltd is considering the following five proposals. Any money not invested in a project will be returned to the shareholders immediately. Proposal Outlay - Now ($) Next Year's Return (Expected Cash Inflows) ($) 1 500,000 515,000 2 500,000 533,000 3 500,000 550,000 4 500,000 545,000 5 500,000 530,000 Assume a two-period certainty model where the market rate of interest is 8%. a. Explain which proposals the company should undertake. 1 Mark b. Ernie holds 10% shares of the company. If the company follows your advices from part (a) calculate how much dividend will Ernie receive from Bright Ltd now and in next year? (Show answers correct to two decimal places) 2 Marks c. Assume Ernie has no other income. Ernie wants to consume $20,000 now and $40,000 one year later. He also wants to and buy a property priced $90,000 today and a caravan priced $50,000 one year later. Explain with calculation how he can rearrange his income so he can do all he wants. (Show answer correct to two decimal places.)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
