Consider the following going concern, whose balance sheet values are shown for the end of the previous year, and the flows are for the last year. The income tax rate is $27\%$ and the interest rate on the debt is $5\%$ annually. The company faces three scenarios with equal probability of occurrence. The measure of the risk of a variable is Coefficient of Variation, CV$.$

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a$)$ Fill in the table above with data in the blank boxes $($round all values to the nearest unit$).$

Now suppose that the company issues debt for $400$ and with those funds repurchases shares so that now Debt $=700$ and Equity $=300.$

b$)$ Calculate the new expected values of ROCE and ROE.

c$)$ Calculate the new risk measure for ROCE and ROE and compare with the results obtained in a$).$ Explain clearly what you observe.

Now assume that the flows and leverage from case a$)$ will be constant in perpetuity. The opportunity cost of equity is $17\%$ per year.

d$)$ Calculate the WACC with book value weights. Assume that the effective cost of debt corresponds to the minimum required by banks.

e$)$ How much are these flows worth to you? Suppose the first payment is at the end of this year.