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3. Two firms are identical in assets value, EBIT, and stock price per share, but one firm is unlevered, and another firm is levered
3. Two firms are identical in assets value, EBIT, and stock price per share, but one firm is unlevered, and another firm is levered with $5,000 debt and 8% interest, as illustrated in the table below. Please solve for the equity value, number of stock shares outstanding, debt to assets ratio, earnings per share, and return on equity for both unlevered and levered firm, assuming that tax rate is 0% and that the market value of equity is the same as the book value of equity. You can copy and paste the table for Excel for easier computation. (6 points) Unlevered Firm $ Levered Firm $ Assets 20.000 20,000 $ Debt 5,000 Equity Interest Rate 8% 8% $ Share Price 100 100 Shares Outstanding Debt/Asset Ratio $ $ EBIT 2.000 2,000 Interest Expense Net Income Earnings per Share Return on Equity
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