# finance assignment

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JbexUneq

## Description

use formula sheet and show And show the calculation steps.

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SAINT MARY’S UNIVERSITY SOBEY SCHOOL OF BUSINESS Department of Finance, Information Systems and Management Science Business Finance II FINA3361 Formula Set Formulas from FINA2360 you may find helpful: PV = FVt (1 + r )t PV = C r PV = C r-g 1 é ê1 - 1 + r t ( ) PV = C ê ê r ê ë ù ú ú ú ú û é (1 + r )t - 1 ù FVt = C ê ú r êë úû 123 - 1 − 0 124 5 𝐶 1+𝑔 𝑃𝑉 = (1 − * , . = 𝐶/ 6 𝑟−𝑔 1+𝑟 𝑟−𝑔 m é APR ù EAR = ê1 + -1 m úû ë EAR = e APR - 1 m é APR ù f EPR = ê1 + -1 m úû ë ?@AB@ 𝐶+ 𝑌𝑇𝑀:;;4
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Find the solution for Problem 1-3 attached herewith, so yo can submit the assignment.. Will finish 4 & 5 and upload them in sometime..

(WE) = Weight of Equity
(WD)= Weight of Debt
(VU)= Value of Unlevered Firm
(VL) = Value of Levered Firm
(RE)= Cost of Equity
(RD)= Cost of Debt
(RU)= Cost of Unlevered Equity

(RU) = 13.5%,
VU

VL

EBIT = 149,000,

=

EBIT (1-Tax) / RU

=

149,000 (1 – 35%) / 13.5%

=

96,850 / 13.5%

=

\$717,407

=

VU+ (Debt)(Tax Rate)

=

717,407 + (265,000 x 35%)

=

717,407 + 92,750

=

810,157

Equity =

RE

(RD) = 9%,

Tax rate (t) = 35%

VL

-

Debt

=

810,157

-

265,000

=

545,157

=

RU + (RU – RD) x (D/E) x (1 – T)

=

13.5% + (13.5% - 9%) x (265,000 / 545,157) x (1 – 35%)

=

13.5% + (4.5% x 0.486 x 0.65)

=

13.5% + 1.42%

=

...

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