1. You are employed as an analyst by an investment firm in Melbourne. Jane, your manager, wants you to write a brief summary in which you will summarise your findings about the relation between systematic risk and the size of firms.
2. Ink Inc. expects to have net income of $100,000 next year. Ink’s optimal capital structure is 30% debt and 70% equity. Ink’s planned capital budget for next year is expected to be $130,000. If Ink uses the residual dividend policy to determine next year’s dividend payout, how much will Ink pay out next year?
3. You are considering the purchase of a new server that would cost $1.5 million and produce cash flows of $400,000 per year for the first two years, $500,000 per year for the next two years, and $700,000 for the final year of its life. If your required return is 12%, what is the NPV of buying the server?
A. $3,246,868
B. $1,000,000
C. $990,189
D. $246,868