solved Case 2A: The Capital Structure1. At http://es.finance.yahoo.com/ find the Profile

Case 2A: The Capital Structure1. At http://es.finance.yahoo.com/ find the Profile (Profile) of PepsiCo (PEP) and IBM (IBM), and then examine the Balance Sheet and Income Statement for each company. Calculate the present value of the interest tax savings that contribute to your long-term debt. Now suppose they each issue $ 3 trillion more of long-term debt and that they use the proceeds to buy back equity. What change would the tax savings experience?2. Scroll down and click on the word “Industry” in the left column. This will give you a table of financial ratios or ratios for different industries. Compare the debt to equity ratios of companies. Can you explain the differences? Are these better explained according to the theory of equilibrium or according to that of the financial hierarchy?Case 2B: The Time Value of Money: Retirement Planning”Boy, this is all so confusing,” Ryan said when he looked at the documents on his desk. If I had only taken the advice of my finance professor, I would not be in such a situation today. “Ryan Daniels, 27, graduated five years ago with a degree in food marketing and currently works as a mid-level manager for a chain of supermarkets with considerable success. His current annual salary of $ 70,000 has increased at an average rate of 5 percent per year and is projected to increase at least at that rate for the foreseeable future. The company has had a retirement savings program On-site volunteer, whereby employees can contribute up to 11% of their gross annual salary (up to a maximum of $ 12,000 per year) and the company matches the contribution with every dollar the employee contributes. Unfortunately, like many other young people Starting at his first “real” job, Ryan has not yet taken advantage of the retirement savings program. He opted to buy a luxury car, rent an expensive apartment and consume most of his income. s.However, with wedding plans on the horizon, Ryan has finally come to understand that he must start saving some money for the future. His fiancee, Amber, of course, had a lot to do with his realization of this reality. Amber reminded Ryan that in addition to retirement, there would be several other big expenses coming up soon and that it would be prudent for him to devise a comprehensive savings plan, taking into account the various cost estimates and timelines involved.Ryan figures that the two biggest expenses down the road would be those related to the wedding and a down payment on a house. He estimates that the wedding, which will take place in twelve months, should cost about $ 15,000 in today’s dollars. Also, he plans to move into a $ 250,000 house (in today’s terms) in 5 years from now and would need 20% for the down payment. Ryan is aware that his estimates are in current terms and would have to be adjusted for inflation. Also, he knows that an automatic payroll deduction is probably the best way to go as he is not a very disciplined investor. Ryan is really not sure how much money he should contribute each month, considering the effects of inflation, differences in terms, and the salary increases he would be receiving. This whole numbers thing seems overwhelming and the goals seem insurmountable. If you had only started planning and saving five years ago, your financial situation would have been much better. But, as the saying goes, “It’s better late than NEVER!”Questions:1. What was Ryan’s starting salary? How much could he have contributed to the voluntary savings plan in his first year of employment?2. If Ryan had taken advantage of the company’s voluntary retirement plan to the maximum extent, each year for the past five years, how much money would he currently have accumulated in his retirement account, assuming monthly deposits and a nominal rate of return of 7 %? How much more would the value of his investment have been if he had opted for a riskier alternative (for example, 100% common stocks), which are expected to yield an average rate of return of 12%?