3. Construct a simple numerical example to convince Drywall that the lease would expose the law firm

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3. Construct a simple numerical example to convince Drywall that the lease would expose the law firm to financial risk. [Hint: What is the rate of return on the firm’s equity investment in the office building if a recession arrives and the market value of the (leased) office building falls to $9 million after one year? What is the rate of return with conventional mortgage financing? With all-equity financing?]

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Principles Of Corporate Finance

ISBN: 9781264080946

14th Edition

Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans

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