You have a new project: you are planning to start a new company. An old and established company, Sander Inc., has the same type of fixed assets and working capital you plan to use in your new company, and its products are very similar to the ones you think to produce $($hence the two firms$$ assets have very similar systematic riskiness and return$).$ Sander$$s assets are worth $148,000,000.$ Sander$$s debt is worth $103,000,000,$ it is riskless and the company keeps a constant debt$-$to$-$equity ratio. Sander$$s expected return on equity is $12\mathrm{.}00\%$ and the return on debt is $4\mathrm{.}00\%.$

For your new project you will keep a constant, perpetual and risk free debt of $90,000,000.$ Your assets will require an initial investment of $85,000,000$ and will be depreciated straight line over $5$ years. After that, there will be no more capital expenditure. The depreciation tax shield is as risky as debt. The project will produce an expected EBITDA next year of $14,250,000$ and will grow perpetually at a $3\mathrm{.}20\%$ rate.

The corporate tax rate is $30\%.$

a$)$ Using the information you have about Sander, compute the expected return on

unlevered equity for your new company? $[10$ Points$]$

b$)$ What is market value of the assets of your new company? $[10$ Points$]$

c$)$ What is the expected return on company$$s levered equity? $[5$ Points$]$