"Suppose you borrow $750,000 when financing a coffee shop which is valued at $1,600,000. You expect to generate a cash flow of $2,250,000 at the end of the year. The cost of debt is 6%. What should the value of the equity be? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, enter 500 as an answer." QUESTION 2 "Suppose you borrow $750,000 when financing a coffee shop which is valued at $1,600,000. You expect to generate a cash flow of $2,250,000 at the end of the year. The cost of debt is 6%. What is the cost of equity? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05" QUESTION 3 "Suppose you borrow $80,000 when financing a coffee shop which is valued at $125,000. Assume that the unlevered cost of capital for the coffee shop is 7.5% and that the cost of debt is valued at 4%. What should be the cost of equity of your firm? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05" QUESTION 4 "ECB borrows $1,000,000 USDs by issuing 5-year bonds. ECB's cost of debt is 4%, so it will need to pay $40,000 USDs in interest each year for the next 5 years, and then repay the principal $1,000,000 USD in year 5. ECB's marginal tax rate will remain 35% throughout this period. By how much (in USDs) does the interest tax shield increase the value of ECB? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, enter 500 as an answer." "Suppose you borrow $750,000 when financing a coffee shop which is valued at $1,600,000. You expect to generate a cash flow of $2,250,000 at the end of the year. The cost of debt is 6%. What should the value of the equity be? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, enter 500 as an answer." QUESTION 2 "Suppose you borrow $750,000 when financing a coffee shop which is valued at $1,600,000. You expect to generate a cash flow of $2,250,000 at the end of the year. The cost of debt is 6%. What is the cost of equity? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05" QUESTION 3 "Suppose you borrow $80,000 when financing a coffee shop which is valued at $125,000. Assume that the unlevered cost of capital for the coffee shop is 7.5% and that the cost of debt is valued at 4%. What should be the cost of equity of your firm? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05" QUESTION 4 "ECB borrows $1,000,000 USDs by issuing 5-year bonds. ECB's cost of debt is 4%, so it will need to pay $40,000 USDs in interest each year for the next 5 years, and then repay the principal $1,000,000 USD in year 5. ECB's marginal tax rate will remain 35% throughout this period. By how much (in USDs) does the interest tax shield increase the value of ECB? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, enter 500 as an
