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4. Assume that all parties involved face an interest rate of 7%. An enterprise can be financed which will generate $100 million in earnings annually
4. Assume that all parties involved face an interest rate of 7%. An enterprise can be financed which will generate $100 million in earnings annually forever and with no risk with either the sale of 1% of the equity or by taking on corporate debt with a face value of $10 million, a coupon rate of 11% and ten years to maturity. What is the present value of each?
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