Please help solving this problem thank you $!$ Homemade Leverage $[$LO$1]$ The Day Company and the Knight Company are identical in every respect except that Day is not levered. Financial information for the two firms appears in the following table. All earnings streams are perpetuities, and neither firm pays taxes. Both firms distribute all earnings available to common stockholders immediately.$\backslash (\backslash$$ $75,000\backslash )$ a$.$ An investor who can borrow at $6$ percent per year wishes to purchase $5$ percent of Knight's equity. Can he increase his dollar return by purchasing $5$ percent of Day's equity if he borrows so that the initial net costs of the strategies are the same? b$.$ Given the two investment strategies in part $\backslash (($a$)\backslash ),$ which will investors choose? When will this process cease?The Day Company and the Knight Company are identical in every respect except that

Day is not levered. Financial information for the two firms appears in the following table.

All earnings streams are perpetuities, and neither firm pays taxes. Both firms distribute all

earnings available to common stockholders immediately.

a$-1.$ What will the annual cash flow be to an investor who purchases $5$ percent of

Knight's equity? $($Do not round intermediate calculations and round your answer

to the nearest whole number, e$.$g$.,32.)$

a$-2.$ What is the annual net cash flow to the investor if $5$ percent of Day's equity is

purchased instead? Assume that borrowing occurs so that the net initial investment

in each company is equal. The interest rate on debt is $5$ percent per year. $($Do not

round intermediate calculations and round your answer to the nearest whole

number, e$.$g$.,32.)$