Question: S. You plan to structure a debt issue for a corporation You have collected thefollowing information on the market values ofdebt and equityfor the

S. You plan to structure a debt issue for a corporation You have collected thefollowing information on the market values ofdebt and equityfor the last ten yars: 2007 2009 2010 2011 2012 2013 201 t Market Value of Equity 1824.9 2260.6 2389.6 1960.8 2226 1875.9 2009.7 2589.3 3210 3962.7 Debt 836 1053 In addition. you have the following information on thc changes in long term interest rates. inflation rates, GNP, and exchange rares over the same period. Year LongBondRate GAW Growth weighted Dollar Rare 2005 2007 2009 2010 201 2012 2013 2014 11.40% 9.00% 9.40% 9.70% 9.30% 8.10% 7.20% 6.44% 5.40% 7.89% 5.35% 622% 3.34% 5.97% 125.95 n2.s9 93.88 95.32 10226 96.25 105.22 98.6 3.50% 3.70% 4.10% 5.40% 250% Using the above information, a. Estimate the duration OJ rhis firm 's projects. HOW would you use this irrormation in designing the debt issue? b. HOW cyclical is this company? HOW would rhat affect your debt issue? e. Estimate the sensitiviO' of firm value to exchange rates. How would you use this information in designing the debt issue? d How sensitive is firm value to inflation rates? How would you use this information in designing the debt issue? e. What factors might lead you to override the results of this analysis?

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