Using c++ Random Number Guessing Game Write a program that generates a random number between 1 and 100 and asks the user to guess what the number is. If the….

## What is the present value of the tax shield?3 What is the size of debt?

Assuming that there is an unlevered firm and a levered firm. The basic information is given by the following table.

Table1: Information of the firms

Unlevered firm | Levered firm | |

EBIT | 10000 | 10000 |

Interest | 0 | 3200 |

Taxable income | ||

Tax (tax rate: 34%) | ||

Net income | ||

CFFA |

Assuming that cost of debt =8%; unlevered cost of capital =10%; systematic risk of the asset is 1.5

1 Fill in the blanks

2 What is the present value of the tax shield?3 What is the size of debt?

4 Calculate the following values:

a) value of unlevered firm; b) value of the levered firm; c) equity value; d) Cost of equity; e) cost of capital; f) systematic risk of the equity

5 Suppose that the firm changes its capital structure so that the debt-to-equity ratio is 1.0, then recalculate the systematic risk of the equity