Question 8 and 9 uses data from question 7, please help with all 3 questions!! Will upvote.

7. The following data is from Gilead Sciences (GILD), an American biopharmaceutical company headquartered in Foster City, California. The stock is currently trading at $83 per share and there are 1.26 billion shares outstanding. Financial statements are from the year 2022. The balance sheet from 2022 is reproduced below, all data is in billion dollars: i. Net operating cashflow is currently 9.7B. Compute the Acid Test. Suppose that Bristol Myers Squib (BMY), a competitor of Gilead, has an Acid Test of 0.821, which company has a better cashflow situation? ii. Compute the Leverage Ratio. 8. In this question we will continue using the data from Gilead Sciences. The income statement is reproduced below. Gilead is paying annual dividends of $3 per share and they are expected to grow at 8% per year. Assume a tax rate of 25.3% and a cost of debt of 4.55%. Assume that earnings remain constant. i. Compute price-to-earnings ratio and ROE (return over equity). If biotechnology companies have an ROE of 0.68%, would you recommend investing in Gilead? ii. Estimate the cost of equity iii. Estimate the weighted average cost of capital (WACC) 9. In this question we will continue using the data from Gilead Sciences. Disregard your previous calculation of WACC and assume you are provided a more accurate estimate of 5.28%. Recall the tax rate 25.3% i. Compute EBIT. For the purposes of this analysis, we will use EBIT after unusual expense. ii. Compute ROA (return over assets) iii. What is the theoretical return over equity according to the current data? iv. We are going to build two alternative scenarios for Gilead: high leverage and low leverage. Under high leverage we will assume that debt increases by 15B to 37.96B. Alternatively, under low leverage, debt will decrease by 15B to 7.96B. We will assume that during economic recessions ROA is 3% while in economic expansions ROA is 18%. Compute the theoretical ROE in the scenario of a recession and in the scenario of an expansion for both high and low leverage. What is the lesson that we learn from leverage