1. Adams operates his $60000firm using his own equity. Bob operates his firm with $30000of his own money plus $30000of debt at a cost of8percent interest.

Calculate Adams's and Bob's return on equity if their respective businesses produce earnings before interest and tax of $6500. Assume perfect markets.

Adams's return on equity:%

Bob's return on equity:%

Place your answer in percentage form with two decimal places. For example, an answer of eleven point five zero percent would be entered 11.50.

2. Oak Farms is an unlevered firm with4050shares outstanding and an EBIT of625. Corporate earnings are taxed at a rate of36%.

Calculate EPS for Oak Farms. $Note: Your answer should be in dollars and cents. For example, $0.99.

Suppose that Oak Farms makes a decision to partition (split) its assets into debt and equity. The firm issues $1750of debt at a cost of8.35%, and uses these funds to reduce the amount of equity on its books. The partition does not change the EBIT or the tax rate, but does reduce the number of shares outstanding to3300.

Compute Oak Farms EPS after the partition. $Note: Your answer should be in dollars and cents.

You Must Get Both Parts Correct to Receive Credit

could you please tell me the formulas used to get the answers for both questions please!!!