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Firm ABC has based on the Double Declining Balance Method to compute the depreciation charges of the asset for each year (2nd year in 2022).
Firm ABC has based on the Double Declining Balance Method to compute the depreciation charges of the asset for each year (2nd year in 2022). The growth rate of the firm will continue by the rate forever. The firm should also invest an amount at a fixed investment rate of operating income each year and the firm's total debt amount covers only the bonds. The information about the firm and the market in year 2022 are given below. NOTE: PLEASE SHOW HOW YOU COMPUTE EACH OF THE ITEMS. a) Compute the FCFF and the Firm's value in year 2022. (40p) b) Compute the value of the Firm's equity amount and debt amount in year 2022. (20p) c) Compute the value per bond and the value per share of the firm in year 2022. (15p) d) An investor purchased the par-bond of the firm 2 years ago and sold its bond in year 2022 . The annual coupon rate of the bond is 10% and the face value of the bond is 1.000$. How much is the holding-period return for the investor? (25p)
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