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Problem Solving ( 3 5 marks ) : Consider the following information about Firm ABC: table [ [ Firm ABC Overview ] , [

Problem Solving (35 marks):
Consider the following information about Firm ABC:
\table[[Firm ABC Overview],[Number of Shares,100,000,,],[Price per share,$10,,],[Market value of shares,$1,000,000,,Boom],[Scenarios: State of the Economy],[,Slump,Normal,$175,000],[Operating Income,$75,000,$125,000,$1.75],[Earnings per share,$0.75,$1.25,17.5%],[Return on shares,7.5%,12.5%,]]
A prospective investor is seeking your advice. Specifically, if they have $10 available and can borrow another $10 at some interest rate "r", for what value(s) of "r"(if any) is the following return profile ,15%,25% possible?
Note: a return profile means earning a return of 5% in a slump, 15% in normal times, and 25% in a boom period.
You should clearly explain every step in your solution and provide an intuitive conclusion, i.e., one easily understood by a non-finance reader.
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