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Business, 13.11.2019 04:31 marleas

Companies u and l are identical in every respect except that u is unleveraged while l has $10 million of 5 percent bonds outstanding. assume (1) that all of the mm assumptions are met, (2) that there are no corporate or personal taxes, (3) that ebit is $2 million, and, (4) that the cost of equity to company u is 10 percent. what value would mm now estimate for each firm?

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