Question: Item Given the information in the table below, if farmer C increases his leverage from 20 to .75, what impact will this have on

Item Given the information in the table below, if farmer C increases his leverage from 20 to .75, what impact 4. Leverage (D/E) Income Statement 5. Return to assets(12% of line 1) 6. Interest on debt (7% of line 2) 7.

Item Given the information in the table below, if farmer C increases his leverage from 20 to .75, what impact will this have on the other values in the table? Compute the values and insert them into the space provided in the table leq. 6-2: where g=(rPa-iPd)(1-t)(1-c)]. Balance Sheet 1. Assets 2. Debt 3. Equity Farmer C Farmer C Farmer D $860,000 $143.333 $716,667 $1,433,334 $716,667 $716,667 4. Leverage (D/E) Income Statement 5. Return to assets(12% of line 1) 6. Interest on debt (7% of line 2) 7. Taxable income 8. Taxes (20%of line 7) 9. After-tax income .20 $103,200 -$10,033 $93,167 -$18,633 $74,534 10. Consumption (50% of line 9) w -$37,267 11. Addition to retained earnings $37,267 12. Rate of growth of equity (line 11/line 5.200% 3) 1.50 1.00 $172,000 -$50,167 $121,833 -$24,367 $97,466 -$48,733 $48,733 6.800%

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