Question: Suppose you borrow $13000 when financing a tea shop which is valued at $48000. Assume that the unlevered cost equity of the coffee shop is

Suppose you borrow $13000 when financing a tea shop which is valued at $48000. Assume that the unlevered cost equity of the coffee shop is 15% and that the cost of debt is valued at 8%.

a. What is the value of equity of the tea shop?

b. What is the value of debt next period for the tea shop?

c. What is the value of the cash flow next period for the tea shop?

d. What is the average cost of capital of the tea shop?

e. What is the cost of equity of the tea shop?

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