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alpha Alpha Corporation and Beta Corporation are identical in every way except their capital structures. Alpha Corporation, an all-equity firm, has 4,000 shares of stock
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Alpha Corporation and Beta Corporation are identical in every way except their capital structures. Alpha Corporation, an all-equity firm, has 4,000 shares of stock outstanding, currently worth $10 per share. Beta Corporation uses leverage in its capital structure. The market value of Beta's debt is $25.000, and its cost of debt is 10%. Each firm is expected to have EBIT of $35,000 in perpetuity. Neither firm pays taxes. How much does it cost to purchase 20% of Beta Corporation's equity Step by Step Solution
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