ABC Co. and XYZ Co. are identical firms in all respects except for their capital structure. ABC is all equity financed with $575,000 in stock. XYZ uses both stock and perpetual debt in equal proportions; Its stock is worth $287,500 and the Interest rate on its debt is 8 percent. Both firms expect EBIT to be $64,000 every year, forever. Ignore taxes. (Do not round Intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) a. Richard owns $34,500 worth of XYZ's stock. What rate of return is he expecting? Rate of return 14.51% Milano Pizza Club owns three Identical restaurants popular for their specialty pizzas. Each restaurant has a debt-to-equity ratio of 40 percent and makes Interest payments of $35,000 at the end of each year. The cost of the firm's levered equity is 18 percent. Each store estimates that annual sales will be $1.21 million, annual cost of goods sold will be $514,500, and annual general and administrative costs will be $343,000. These cash flows are expected to remain the same forever. The corporate tax rate is 40 percent. a. Use the FTE approach to determine the value of the company's equity. (Round the answer to 2 decimal places. Omlt $ sign in your response.) Equity value $ 1,058,333.33 b. What is the total value of the company? (Do not round Intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) Total value $ 1.481,666.67