The following are selected financial information on Firm A and Firm B. You are asked to complete the table by methodically calculating the missing information.

You will assume that Cost of Goods Sold (COGS) is 65% of Sales and that the company uses a marginal tax rate of 35%.

Firm AFirm B

Revenue$ 3,000$ 3,000

COGS(Blank)(Blank)

Gross Profit1,0501,050

Operating Expense. (300)(300)

EBIT 750750

Interest Expense(Blank)(Blank)

EBT. (Blank)(Blank)

Income Tax @35%. (Blank)(Blank)

Net Income$488$472

Earnings per share. (Blank)(Blank)

Dividends per share.(Blank)(Blank)

Expected Return on Equity(Blank)(Blank)

Estimated Share Price(Blank)(Blank)

Market Value of Equity(Blank)(Blank)

Market Value of Debt(Blank)(Blank)

Enterprise Value$2,181$2,503

Outstanding Debt$ -$300

Shares Outstanding. 600300

Cost of Debt6%8%

Beta 1.401.70

Expected return on Market. 9%9%

Dividend pay-out ratio 50%60%

Dividend growth. 2%2%

Risk free 3%3%

Common equity $600$300

Companys debt trading @n/a105