Business, 05.05.2020 22:32 endreu2005
Consider two firms, U and L, that have identical assets that generate identical cash flows. U is an all-equity firm, with 1 million shares outstanding that trade for a price of $24 per share. L has 2 million shares outstanding and $12 million dollars in debt at an interest rate of 5%. Assume perfect capital markets. According to MM Proposition 1, the stock price for L is closest to: Group of answer choices $12.00 $6.00 $8.00 $24.00
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Consider two firms, U and L, that have identical assets that generate identical cash flows. U is an...
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