1. Prepare an amortization schedule for a three-year loan of $100,000. The interest rate is 5% per year, and the loan calls for equal annual payment. How much is the equal payment amount? How much interest is paid in the third year? (Hint, see the example in slide).

2. The candy coat Co. earned $25 million before interest and taxes on revenues of $70 million last year. Capital expenditures were $20 million, and depreciation was $12 million. The additions to working capital were $6 million. The firm’s weighted average cost of capital is 10.45%, the marginal tax rate is 40%, and the expected cash flow growth is 5%. The market value of debt is $25 million. The value of the firm’s equity is? (Write down the calculation process with your answer, otherwise you will receive 0)