Working capital and capital budgeting

Complete the following problem sets in Financial Management using Microsoft® Excel

Working capital and capital budgeting. Farbuck’s Tea Shops is thinking about opening another tea shop. The incremental cash flow for the first five years is as follows:Initial capital cost = $3,500,000 Operating cash flow for each year = $1,000,000 Recovery of capital assets after five years = $250,000The hurdle rate for this project is 12%. If the initial cost of working capital is $500,000 for items such as teapots, teacups, saucers, and napkins, should Farbuck’s open this new shop if it

Compare and contrast mature profitable firms with stable cash flows with firms with higher risk (dependencies on economy) with unstable cash flows. What risks do they take in regards to leverage use, tax shields, and trading information between managers and investors?

Company X just paid dividend and is expecting both earnings and dividends to grow by 15% in year 1, 0% in year 2, by 5% in year 3, and at a constant rate of 10% in year 4 and thereafter. The required return on Company X is 15%, and it sells at its equilibrium current price $21.88. What is the value of its expected dividend in year 1?


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