Consider a company whose assets yield a single cash$-$flow, to be paid

out in one year, equal either to SEK $1500$ or to SEK $500.$ The claims consist of a

$($zero$-$coupon$)$ bond, with face value of SEK $500,$ and equity. The market$-$value of

the company is equal to SEK $850,$ and the risk$-$free rate of interest is equal to $4\%.$ The

shareholders are shielded by limited liability.

P$6\mathrm{.}1\mathrm{.}1$ What are the shareholders$$ and the bondholders$$ cash$-$flows, in each state?

P$6\mathrm{.}1\mathrm{.}2$ What is the expected yearly rate of return faced by the share$-$holders, if the

probabilities of the good and the bad state are respectively $0\mathrm{.}45$ and $0\mathrm{.}55?$ What is the

company$$s weighted average cost of capital?

P$6\mathrm{.}1\mathrm{.}3$ Consider the following statement: $$The expected rate of return on the company$$s equity is higher than the rate of return on the company$$s debt. This is an indication that the company is not properly financed; we should take on a larger amount

of $($cheap$)$ debt, to increase the present value of the company, and the rate of return

on the company$$s equity. In my view, we should increase debt by at least SEK $100($in face$-$value terms$).$

What important aspect of the financing problem is missed in this statement? How we can dismiss the given argument, with no information about the investors$$ preferences

beyond that provided by the given data $($if any$),$ if there are at least a few agents in the

market who can borrow and lend at the risk$-$free rate of $4\%$ and the tax$-$rates are equal

to zero? Dear Expert, provide comprehensive notes and calculations to this problem for me okay