QUESTION

Firm ABC has based on the Double Declining Balance Method to compute the depreciation

charges of the asset for each year $(2$nd year in $2022).$ The growth rate of the firm will

continue by the rate forever. The firm should also invest an amount at a fixed investment rate

of operating income each year and the firm's total debt amount covers only the bonds. The

information about the firm and the market in year $2022$ are given below.

NOTE: PLEASE SHOW HOW YOU COMPUTE EACH OF THE ITEMS.

a$)$ Compute the FCFF and the Firm's value in year $2022.(40$p$)$

b$)$ Compute the value of the Firm's equity amount and debt amount in year $2022.(20$p$)$

c$)$ Compute the value per bond and the value per share of the firm in year $2022.(15$p$)$

d$)$ An investor purchased the par$-$bond of the firm $2$ years ago and sold its bond in year $2022.$

The annual coupon rate of the bond is $10\%$ and the face value of the bond is $1\mathrm{.}000$$$.$ How

much is the holding$-$period return for the investor? $(25$p$)$