QUESTION 1 This is a file response type of question. Please include answers afin a single file (Excel, Word, or scan of your notes, whatever works faster for you). If you're having technical difficulties and/or can't include the file for whatever reason, DONT PANIC and send your file to TA via mail extremo sucedu) after exam Suppose company ABC will be worth either 250 Mor 150 M depending on whether the economy is strong with 50% probability of weak with 404 probability in one year 1. The current risk-free rate is and the cost of equity in the company is 100% equity financed s 15. Assume perfect world (4 points What is the maximum amount ABC can borrow at under interest rate? Calculace and explain b. 14 points) What would be the company's debt-to-value ratio of ABC borrows the amount you found in a c. to points) Determine interest rate cost of debt at which ABC could borrow $150 M de points on the debto value ratio tas x) and Expected rate of returnas y plane draw graphs of wacand especific on the graph please indicate all the known values of race and raindicate a value anter which it to increase To graph water and a you may Excelandpload your work id paper and include an of your graphs The format of your graph should be as shown below QUESTION 1 This is a file response type of question. Please include answers afin a single file (Excel, Word, or scan of your notes, whatever works faster for you). If you're having technical difficulties and/or can't include the file for whatever reason, DONT PANIC and send your file to TA via mail extremo sucedu) after exam Suppose company ABC will be worth either 250 Mor 150 M depending on whether the economy is strong with 50% probability of weak with 404 probability in one year 1. The current risk-free rate is and the cost of equity in the company is 100% equity financed s 15. Assume perfect world (4 points What is the maximum amount ABC can borrow at under interest rate? Calculace and explain b. 14 points) What would be the company's debt-to-value ratio of ABC borrows the amount you found in a c. to points) Determine interest rate cost of debt at which ABC could borrow $150 M de points on the debto value ratio tas x) and Expected rate of returnas y plane draw graphs of wacand especific on the graph please indicate all the known values of race and raindicate a value anter which it to increase To graph water and a you may Excelandpload your work id paper and include an of your graphs The format of your graph should be as shown below
