an al QUESTION 3 Shop Right Plc has earnings before interest and tax (EBIT) GHe 10 million and there is GHc60 million of debt outstanding with required rate of return 6.5%. The required rate of return on the industry is 10% and corporate tax is 30%. Assume there are corporate taxes but no personal taxes. Required: Determine the present value of the interest tax shield of Shop Right Plc as well as the total value of the firm. Determine the gain from leverage, if personal taxes of 10% on share income and 35% on debt income exists. QUESTION 2 You have just collected your lump sum from the sale of your building which amounts to GHC100,000,000. You have decided to invest in three assets. From a detailed analysis you have decided to invest GHc10,000,000 in Government of Ghana Treasury Bills (T-bills), GHc60,000,000 in stocks and the remaining amount in Government of Ghana Bonds. Available information shows that T-bills provide expected return of 4% with a standard deviation of 3%, Stocks provide expected return of12% with a standard deviation of 20% while Bonds provide an expected return of 8% and a standard deviation 10%. Correlation coefficients between these investment vehicles are as follows: Between Stock and Bond = 0.25, Between Stock and T-bills = -0.08, between bond and T-bills = 0.15. Required: a) Expected return on the portfolio b) Risk and coefficient of variation on the portfolio