Companies d and l are idenitcal in every aspect exect that, Ask an Expert

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Companies D and L are idenitcal in every aspect exect that D is unlevereged while L has 15 million and 6% bonds outstanding . Assume that all the MM assumptions are met, both firms are subject to a40% federal plus state corporate tax rate , that EBIT is 10 million and cost of equity of D is 10%

1. What value would mm estimate for each firm

2. What is the required return on equity for L

3. What is the wacc

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Financial Management, Finance

Category:- Financial Management
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