Business Finance-II (FIN507)

Weekly Assignment # 8

Instructor: Sana Tauseef

Semester: Spring 2023
Due Date: April 09, 2023, 11 p.m.

1. Suppose that the management of a company with poor future prospects

recommends to the board of directors an increase in its dividend. Management
explains to the board that investors may then believe that the company has
positive future prospects, leading to an increase in share value and shareholder
wealth. State whether such imitation is likely to achieve the stated objective over
the long term and justify your answer.
(4-6 lines)

2. May 2018, Globus Maritime Ltd, a Greek dry bulk shipping company providing
worldwide maritime transportation services, was warned by NASDAQ that it no
longer met the continuing listing requirements once its share price had traded
below the US$1 a share minimum price requirement for 30 consecutive business
days. Globus was given until the end of October 2018 to regain compliance.
Globus announced a 1 for 10 reverse split to occur on 15 October. On 12
October, shares were trading at US$4.25 before the reverse split had taken
place. If the reverse split were to take place when the share price was US$4.25,
find the expected stock price after a 1-for-10 reverse split, assuming no other
factors affect the split.

3. List the PSX listed companies that bought back shares during 2022-2023. Also
mention the number of shares bought back and number of shares outstanding
pre-transaction.

4. (Case: Sunar Factory: Investment Opportunity and a Financing Dilemma)

Project the annual cash flows related to the new investment for the next five years.
Is it a good/justified investment opportunity based on the expected return?