Suppose there are no taxes. Firm ABC has no debt, and firm XYZ has debt of $$5,000$ on which it pays interest of $10\%$ each year. Both companies have identical projects that generate free cash flows of $$800$ or $$1,000$ each year. After paying any interest on debt, both companies use all remaining free cash flows to pay dividends each year.

Complete the steps below using cell references to given data or previous calculations. In some cases, a simple cell reference is all you need. To copy$/$paste a formula across a row or down a column, an absolute cell reference or a mixed cell reference may be preferred. If a specific Excel function is to be used, the directions will specify the use of that function. Do not type in numerical data into a cell or function. Instead, make a reference to the cell in which the data is found. Make your computations only in the blue cells highlighted below. In all cases, unless otherwise directed, use the earliest appearance of the data in your formulas, usually the Given Data section.

a$.$ Fill in the table below showing the payments debt and equity holders of each firm will receive given each of the two possible levels of free cash flows.

b$.$ Suppose you hold $10\%$ of the equity of ABC. What is another portfolio you could hold that would provide the same cash flows?

c$.$

Suppose you hold $10\%$ of the equity of XYZ$.$ If you can borrow at $10\%,$ what is an alternative strategy that would provide the same cash flows?

$\backslash$table$[[$Debt ABC,$$0$