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2. Use the information for the question(s) below. (Homemade Leverage) 4pts Consider two firms, A and B, that have identical assets that generate identical cash

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2. Use the information for the question(s) below. (Homemade Leverage) 4pts Consider two firms, A and B, that have identical assets that generate identical cash flows. B is an all-equity firm, with 1 million shares outstanding that trade for a price of \$24 per share. A has 2 million shares outstanding and $12 million dollars in debt at an interest rate of 5%. a) According to MM Proposition 1, the stock price for A is closest to: b) Assume that MM's perfect capital market conditions are met and that you can borrow and lend at the same 5% rate as A. You have $5000 of your own money to invest and you plan on buying B's stock. Using homemade leverage, how much do you need to borrow in your margin account so that the payoff of your margined purchase of B stock will be the same as a $5000 investment in A stock

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