You are attempting to structure a debt issue for Eaton Corporation, a manufacturer of automotive components.

You have collected the following information on the market values of debt and equity of Eaton along with macroeconomic factors for the past 11 years

a. Estimate the duration of this firms' projects. How would you use this information in designing debt issue? [5 marks]

b. How cyclical is this company? How would that affect your debt issue? [5 marks]

c. how sensitive is firm value to inflation rates? How would you use this information in designing the debt issue? [5 marks]

d. What factors might lead you to override the results of this analysis? [5 marks]

Hints: Note that you need to transform data (in percentage change format) to run the regression.

Required: Please upload the excel file with regression results to support your answers.

Inflation rate Market value of debt equity 2010 1824.9 2011 2518.4 2012 2543.5 2013 2390.9 2014 3251.7 2015 2731.4 2016 2840.7 2017 3920.1 2018 3606.5 2019 2885.2 2020 3923.9 Long bond yield GNP growth 436 11.4 632 9 795 9.4 655 9.7 836 9.3 755 9.3 795 8.8 833 8.1 6499 7.2 1053 8 1099 6.44 5.4 6.9 7.89 7.23 5.35 2.88 6.22 5.34 5.97 6.66 3.5 1.9 3.7 4.1 4.8 5.4 4.2 3 3 2.6 2.4 8.4 Inflation rate Market value of debt equity 2010 1824.9 2011 2518.4 2012 2543.5 2013 2390.9 2014 3251.7 2015 2731.4 2016 2840.7 2017 3920.1 2018 3606.5 2019 2885.2 2020 3923.9 Long bond yield GNP growth 436 11.4 632 9 795 9.4 655 9.7 836 9.3 755 9.3 795 8.8 833 8.1 6499 7.2 1053 8 1099 6.44 5.4 6.9 7.89 7.23 5.35 2.88 6.22 5.34 5.97 6.66 3.5 1.9 3.7 4.1 4.8 5.4 4.2 3 3 2.6 2.4 8.4