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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 15,000 shares of stock

Alpha Corporation and Beta Corporation are identical in every way except their capital structures. Alpha Corporation, an all- equity firm, has 15,000 shares of stock outstanding, currently worth $30 per share. Beta Corporation uses leverage in its capital structure. The market value of Betas debt is $65,000, and its cost of debt is 9 percent. Each firm is expected to have earnings before interest of $75,000 in perpetuity. Neither firm pays taxes. Assume that every

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