Firm ABC has based on the Double Declining Balance Method to compute the depreciation charges of the asset for each year 2nd 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 is given below.
NOTE: PLEASE SHOW HOW YOU COMPUTE EACH OF THE ITEMS
Beta Coefficient: 2
Cost of Asset: $370,000
Dividend Payout Ratio: 30%
EBITDA (Operating Cash Flow): $1,500,000
Investment Rate: 15%
Net Working Capital (2021): $120,000
Net Working Capital (2022): $150,000
ROE: S&P500 Index Return: 12%
Shipping and Installation Cost: $30,000
Tax Rate: 25%
Total Firm Bonds Issued: 6,000 bonds
Total Firm Common Stocks Issued: 15,000 shares
Treasury-Bill Rate: 2%
Useful Life of the Asset: 5 years
b) Compute the value of the Firm's equity amount and debt amount in year 2022.