Coase Corporation, an all$-$equity firm, grows flax. The flax business currently generates a return on equity of $15$ percent and has a cost of capital of $10$ percent.

Coase Corporation is considering expanding its operations by buying land on which to grow soybeans for $$24$ million; the flax business will be unchanged. The soybean farm will generate Q bushels of soybeans each year in perpetuity. The price of soybeans is $$15$ per bushel. Cash operating costs of the soybean farm, all fixed, are $$3,000,000$ per year. The soybean operations have the same risk as do the flax operations, and thus the soybean farm also has a cost of capital of $10\%.$

$($PLEASE SHOW STEPS$)$

Question $1.$

What is the value of Q for which buying the soybean farm will maintain Coase$$s current annual return on equity?

Question $2.$

What is the value of Q for which buying the soybean farm will maintain Coase$$s current annual residual income?

Question $3.$

Suppose Coase Corporation can finance the acquisition of the soybean farm using $$16$ million of riskless, $3\%$ debt and $$8$ million of new equity. What is the value of Q for which acquiring the soybean farm will maintain Coase's current accounting income?

Question $4.$

Given this financing arrangement, what is the minimum value of Q for which the acquisition of the soybean farm is economically justified?