G N o Q R S A B D E F H 1 J K L M 1 Refer to the Excel workbook Ch5_MM_viaBerk & FNZ 2 Go to worksheet Fig 5.1,5.2 detailed. 3 Suppose the entrepreneur wants to finance the project partly by debt and partly by equity. 4 S/he goes to the capital market at time=1 and promises to repay 525TL at time=2 whatever happens. 5 Answer the following questions: 6 7 a) What is D?= how will the market price this guy's promise=how will the market price the debt portion of the capital 8 b) What is E? =how will the market price this entrepreneur's ownership stake= how will the market price the equity portion of the capital 9 c) is the debt of this firm risk free? Briefly explain 10 d) What is the equity rate of return if the economy does well? 11 e) what is the equity rate of return if the economy does poorly? 12 f) what is the expected return for equity? 13 g) What is the range=variability of equity rate of returns 14 h) why does it differ from 0.15 (which is the expected return on unlevered equity in this "economy") 15 16 17 18 19 20 21 22 Windows'u Etkinletir G N o Q R S A B D E F H 1 J K L M 1 Refer to the Excel workbook Ch5_MM_viaBerk & FNZ 2 Go to worksheet Fig 5.1,5.2 detailed. 3 Suppose the entrepreneur wants to finance the project partly by debt and partly by equity. 4 S/he goes to the capital market at time=1 and promises to repay 525TL at time=2 whatever happens. 5 Answer the following questions: 6 7 a) What is D?= how will the market price this guy's promise=how will the market price the debt portion of the capital 8 b) What is E? =how will the market price this entrepreneur's ownership stake= how will the market price the equity portion of the capital 9 c) is the debt of this firm risk free? Briefly explain 10 d) What is the equity rate of return if the economy does well? 11 e) what is the equity rate of return if the economy does poorly? 12 f) what is the expected return for equity? 13 g) What is the range=variability of equity rate of returns 14 h) why does it differ from 0.15 (which is the expected return on unlevered equity in this "economy") 15 16 17 18 19 20 21 22 Windows'u Etkinletir