Consider a simple firm that has the following market-value balance sheet: Assets Liabilities & Equity $1,000 Debt $450 550 Equity Next year, there are two possible values for its assets, each equally likely: $1,190 and $950, its debt will be due with 4.9% interest. Because all of the cash flows from the assets must go either to the debt or the equity, if you hold a portfolio of the debt and equity in the same proportions as the firm's capital structure, your portfolio should earn exactly the expected return on the firm's assets. Show at a por o o invested 45 in he im S debt and % n se n vil ave e same expected return as the assets of the firm. That is, show that the firm's WACC is the same as the expected return on its assets If the assets will be worth $1,190 in one year, the expected return on assets will be | %. (Round to one decimal place.) Enter your answer in the answer box and then click Check Answer parts remaining Clear All Check