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 outstanding, currently worth 510 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. What would be the dollar return to an investor who owns 20% of Beta Corporation's equity