Assume that markets are perfect and that Kratos and Faye have identieal assets that will generate identieal cash flows a year from todiay $($at which point boh firms will pay out all ensh and cease operations$).$ The market value of Kratos's outstanding stock is $$100,000.$ Faye's debt matures for $$30,000$ a year from today and promises a $4"$: retum. The market value of Faye's stock is $$60,000.$ Noter in answering all parts, use a $"",$ "for inflows and

a$.$ Given this information, what set of transactions today will generate an arbitrage profil? What is your profil today from this tralisaction?

b$.$ Show that the conditions of arbitrage are met if Kratos and Eaye's assets generate net cash now of $$110,000$ a Yat from today Be sure to dentify the souree of all cash flows.

c$.$ Show that the conditions of arbitrage are met if Kratos and Faye's assets generate net cash flow of $$25,009$ a Yeal from taday. Be sure to identily the souree of all cash flows.

Please show work by hand and how it could be done in Excel with formulas and work on that as well