1.You are given with the following information statements of a public firm BB in the fast-food industry concurrently. (Notice that all negative numbers are parenthesized). The firm has issued 12 million shares of common stock with current market price as $45/per share, the expected dividend is $4.90/per share with 3.5% growth rate, 300,000 shares of preferred stocks with promised preferred dividend and preferred stock price as $2.20/per share and $22.5/per share, respectively. The firm also has a $6 million loan with annual interest rate as 5.6% for 5 years with market price as $750 with face value as $1000. The corporate income tax rate is 20%.

Answer the following questions:

a) If using the market prices for assessment on rates of return, what is the rate of return of the common stock of BB? What is the rate of return for their preferred stocks?

b) What is the estimate for the bond's cost of capital?

c) Suppose you are also given with the following financial statements of BB for the past three years. What are the historical returns on equity for this company for the past three years? Is the firm BB doing well from the perspectives of shareholders? Why or why not?

d) Is this firm well-diversified with their arrangement of capital? That is, are they well diversified with different sources of capital?

e) Based on the given information, provide your ratios analyses, and interpret your results for the firm's performance.

f) Suppose the industry average for the cost of capital is 4.6%, is the firm financing with suitable capital structure?