Q#2) (25 Marks)

1. There are two capital structure combinations, given below. Do the followings:

1. Calculate the empty cells.
2. Analyze the results in the Expected Scenario. Discuss the possible benefit due to leverage.
3. Work for Expansion (10% increased EBIT from Expected) and for Recession (10% reduced EBIT from Expected).
4. Plot the results in graphs, by plotting equity returns as dependent variable and EBIT as an independent variable.
5. Analyze the results in all possible scenario and conclude your discussion about the effects of financial leverage.

	Current	Proposed			No Debt	With Debt
Assets	10,000,000	10,000,000		EBIT as Expected	1,250,000	1,250,000
Debt	0	4,500,000		Interest
Equity				Net Income
Debtequity ratio				ROE
Share price	$25	$25		EPS
Shares Outstanding	500,000	250,000
Interest Rate	9%	9%

I need The Ans. Urgently!! (In an hour, but pls hurry up!)

b.) A pharmaceutical drug company has invented a useful drug and so is growing quickly. Dividends are expected to grow at a rate of 30 percent for the next 2 years, 20% in coming 2 years and then the growth rate will fall to a constant average growth pattern based upon the companys previous track record. The previous dividend pattern is given below:

2016	2017	2018	2019	2020
2	2.1	2.22	2.38	2.55

(I'll do an immediate rating, Kindly do RESPONDD)