Can someone help me figure out what the formulas are for each of the sections th

Question

Can someone help me figure out what the formulas are for each of the sections that are highlighted blue? If I understand what the formulas would be, I can then solve for each year. Thanks so much

2010 500,000 2011 2012 600,000 2014 2013 650,000 2015 525,000 Common Equitg Preferred Equit 60,000 600,000 650,000 700,000 750,000 Total Firm Yalue 150,000 1,230,000 1,310,000 1410,000 1355,000 1,345,000 Corp. Ta Rate Debt to Equity Ratio 35% 40% 35% The Equity portion of the Debt-to-Equity ratio includes both preferred and common equity BOD CORPORATION Common Equit. Preferred Equity and Debt Expected Returns 2010 2011 2012 2013 2014 2015 Common Equitg Ezpected Return Beta Risk Free Rate Exp. Market Return 1.2 1.8% 11.0% 2.0% 1.5% 10.0% 1.6% 12.0% 2.2% 11.5% 13.0% Preferred Equitg Ezpected Return 2010 2011 2012 2013 2014 2015 Dividend Payment End of Year Price 4.25 70.00 6.00 88.00 75.00 72.00 2010 2011 2012 2013 2014 2015 All Coupon payments are YTM 1,000 40 ParlFace Coupon Payment Years to Maturity Current Price 1,000 1000 1,000 1,000 1,000 1,100 1,000 1,050 950 BOD CORPORATION YACC Calculation 2010 2011 2012 2013 2014 2015 YACC

Explanation / Answer

Answer 2010 2011 2012 2013 2014 2015 Common Equity 500000 550000 600000 650000 575000 525000 Preferred Equity 50000 55000 60000 60000 70000 70000 Debt 600000 625000 650000 700000 710000 750000 Total Firm Value 1150000 1230000 1310000 1410000 1355000 1345000 Tax Rate 35.00% 30.00% 30.00% 40.00% 35.00% 35.00% Debt To Equity Ratio 1.09 1.03 0.98 0.99 1.10 1.26 Common Equity Expected Return 10.85% 8.75% 12.84% 15.12% 11.50% 10.90% Beta 1.1 0.9 1.2 1.3 1.0 0.8 Risk Free Return 1.50% 2.00% 1.80% 1.60% 2.20% 2.50% Exp. Mkt Return 10.00% 9.50% 11.00% 12.00% 11.50% 13.00% Preferred Equity Expected Return 6.67% 6.07% 5.49% 6.56% 5.56% 6.82% Dividend Payment 5.00 4.25 4.50 5.25 4.00 6.00 End of year Price 75.00 70.00 82.00 80.00 72.00 88.00 Debt YTM 4.25% 5.70% 5.00% 5.10% 5.29% 4.41% PAR/Face 1000 1000 1000 1000 1000 1000 Coupon Payment 55 55 50 55 45 40 Year to Maturity 10 15 13 20 21 18 Current Price 1100 980 1000 1050 900 950 WACC 6.88% 6.14% 7.87% 9.10% 6.70% 6.06% Debt To Equity Ratio '= 'Debt'/share holders fund '= 'Debt'/share holders fund Common Equity Expected Return '= Rf+beta (Exp. Mkt Return-Rf) Preferred Equity Expected Return Dividend/ End of year Price YTM = i+(F-P)/n/0.4F+0.6P

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