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1. ABC Corp and MMM Corp are identical in every way except their capital structures. ABC Corp., an all-equity firm, has 20,000 shares of stock

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1. ABC Corp and MMM Corp are identical in every way except their capital structures. ABC Corp., an all-equity firm, has 20,000 shares of stock outstanding, and it's cost of capital bs 7.45\%. MMM Corp. uses leverage in its capital strueture. The market value of MMM's. debt is $85,000, and it's cost of debt is 9%. Fach firm is expected to have eamings before interest (EBIT) of $93,000 in perpetuity. Assume that the marginal tax rate for each firm is 22%. How much will it cost to purchase 20% of MMM's equity? a. 5175,432.31 b. $237,652,81 c. $181,478.26 d. $211,670.23 c. None of the above

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