Question: Please show excel file with formulas 2. GS develops and markets video games. GS has a major new project. The following table gives the expected
Please show excel file with formulas

2. GS develops and markets video games. GS has a major new project. The following table gives the expected free cash ows, exclusive of nancing and dividends. Year!) Year] Year2 Year-3 Year-1 Year Fiee Cash Flow M} 1D 15B 1'5 3D 11\".] 5D Year D is the year before launch, and the negative $IDM repres-ts the development costs. Year 1 is the launch year. A new version will be developed in Year 3 for release in Year 4. The video game will be discontinued after Year :1. GS plans to nance the project by issuing a bond. The bond pays 7% interest in each of Years '1] to 5. '33 will repay the principal and discontinue the game at the end of Year 5. Working capital in years {I to 5 should be nonnegative. '33 will issue dividends D: in Years t=1 to 5. The net present value of the project is 5'1 13: 5'3 5'4 5'5 + +{1+r}3+[1+r)'1+{1+r}5 \"PF: [1+r} {1+r}= For discounting purposes, the interest rate, r, for CS is 113%. In addition, GS wants to maintain a minimum dividend payment of $113M for each of the years 1 to 5. (33 needs to decide on the amount of the bond to issue [in $1391] at the beginning of Year 1'] and the dividend policy {in $M) in Years 1 to 5 to maximise NPV. Treat years as nodes and assume that all activity happens at the beginning of each year
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
