Consider a simple firm that has the following market-value balance sheet Assets Liabilities &Equity $430 610 1,040 Debt Equity Next year, there are two possble values for its assets, each equaly likely $1,180 and S960 lts debt will be due with 4 9% interest Because a l of the cash flows from the assets must go either to the debt or the equity, if you hold a portiolio 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 fi s assets Show that a porti lio in ested 41% in the firm's debt and 59% n its equity will have the same expected return as the assets of the firm That is show that the im ACC s the same as the expected returm on its assets ?fthe assets wil be worth $1,180 in one year, the expected return on assets will be 13.5% (Round to one decimal place ) "the assets wil be worth S960 in one year, the expected return on assets wil bel-17% (Round to one decimal place ) The expected return on assets will be 29% (Round to one decimal place For a portiolo of 41%debt and ses equity theexpected return on the debt will be % (Round to one decimal place ) "the equity wa be worth S728 93 in one year the expected return on equity wil be[ % (Round to one decirnal place ) tho equity will be worth $500 93 in one year, the expected retun on equity will bo The expected return on equity wil be % (Round to one decimal place ) The opeded pre-tax return on a portfolio ot 41% debt and 59% equity Round to one decimal place) wil be )% (Round to one decimal place There may be a slight difference due to rounding )