Construct the relevant aspects of financial statements for the following firm:
• Its operations last for 5 years.
• It has capital expenses of $100 for three years.
• It follows two-year linear depreciation.
• It has revenues that start at $100 in the first year and grow by 30% each year.
• It is purely equity financed.
• It’s corporate income tax rate is 40%.
• Customers always pay the year after they have received the product.
What is the firm’s NPV if the CoC is 15% per year?
What is the same (a) firm’s and (b) equity’s NPV if it borrows $200, pays $20 in interest every year, and pays back the $200 principal in the final year?