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1Week 7 AssignmentMary EndicottAmerican Public UniversityFINC300: Foundations in Financial ManagementDr. Edward BalliOctober 25, 2021
2Week 7 AssignmentExercise 1 Chapter 29In exercise 1 the Rawhajpoutalah Intl. Company has two different divisions A and B.(a)The values for divisions A= 50/0.15=333.3The Value for division B=300/0.15=2000(b) The value of division A remains unchanged, division B= 390/0.15=2600; 300 reinvestedand created a value of 300.Growth rates in perpetuity has an expected annual growth each year which would makethis a low-risk investment opportunity and smart decision for any investor.(c)The valuation of division B remains unchanged, division A=65/0.15=433.33 for 300reinvested, the destruction of value is = 200.(d) This shows the valuations of the company when the dividend of 50 and it remainsunchanged for 300 to invest in Division A and Division B equally.Division a=57.5/0.15=383; Division B=345/0.15=2300 for 300 reinvested created a valueof 50.

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