Assuming that there is an unlevered firm and a levered firm. The basic information is given by the following table.

Table1: Information of the firms

	Unlevered firm	Levered firm
EBIT	20000	20000
Interest
Taxable income
Tax (tax rate: 34%)
Net income
CFFA

Assuming that: The size of the debt is 8000; cost of debt =8%; unlevered cost of capital =10%; systematic risk of the asset is 1.5

1. Fill in the blanks
2. What is the present value of the tax shield?
3. Calculate the following values: a) Calculate value of unlevered firm; b) value of the levered firm; c) equity value; d) Cost of equity; e) cost of capital; f) systematic risk of the equity
4. Suppose that the firm changes its capital structure so that the debt-to-equity ratio is 1.6, then recalculate the systematic risk of the equity
5. If the firm now has the following project: in year 0, the cashflow is 5000, in year 1, the cashflow is -5500. Based on the IRR rule, will this project be accepted?