I am working on this finance assignment. Can someone please just tell me what th

Question

I am working on this finance assignment. Can someone please just tell me what the formulas would be for the boxes in blue??? If I can understand what the excel formulas would be (for common equity, preferred equity, common equity expected return, preferred equity expected return, debt, debt to equity ratio, etc) then I can solve for each year. I would greatly appreciate any input. Thanks

Common Equity. Preferred Equity and Debt Balances 2010 2011 2014 2015 525,000 2012 2013 0,000 Common Equity Preferred Equity Debt Total Firm Value Corp. Tax Rate 500,000 50,000 600,000 ,150,000 1,230,000 1,310,000 1,410,000 1,355,000 1,345,000 600,000 65 60,000 650,000 700,000 55,000 60,000 70,000 70,000 35% 30% 30% 40% 35% 35% Debt to Equity Ratio 1.03 1.10 BOD CORPORATION Common Equity. Preferred Equity and Debt Expected Returns 2010 2014 Common Equity Expected Return 2011 2012 2013 2015 Beta Risk Free Rate Exp. Market Return 1.5% 10.0% 0.9 2.0% 9.5% 1.2 1.8% 11.0% 1.6% 12.0% 2.2% 11.5% 0.8 2.5% 13.0% Preferred Equity Expected Return 2010 2011 2012 2013 2014 2015

Explanation / Answer

Formula

2010

Debt to equity ratio = ( 600000/50000+500000)= 1.09

2011

Debt to equity ratio =1.03

1.03= Debt/(Total value of firm- Debt)

1.03= Debt ( 1230000-Debt)

1266900-1.03 Debt = 1.03 Debt

Debt = 1266900/2.03

= 624088

Equity = ( 1230000-55000-624088)

= 550912

2012

Debt to equity ratio = (650000/660000)

= 0.985

2013

Debt equity ratio = (700000/710000)

=0.986

2014

1.1(1355000-Debt)=Debt

Debt = 1490500/2.1

= 709762

Equity = ( 1355000-Debt - preference equity )

= 1355000-709762-70000

=575238

2015

Debt to equity ratio = 750000/595000

= 1.26

BOD expected return

Rf = risk free return

Rm = market return

B = Beta

Expected return = Rf+B( Rm-Rf)

2010= 1.5+1.1(10-1.5)= 10.85%

2011= 2+0.9(9.5-2)= 8.75%

2012= 1.2+1.2(11-1.8)= 12.24

2013= 1.6+1.3(12-1.6)=15.12

2014= 2.2+1(11.5-2.2)= 11.5

2015=2.5+0.8(13-2.5)= 10.9

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