Alpha Corporation and Beta Corporation are identical in every way except their capital structures. Alpha Corporation, an all-equity firm, has 10,000 shares of stock outstanding, currently worth $20 per share. Beta Corporation uses leverage in its capital structure The market value of Beta's debt is $60,000 and its cost of debt is 8 percent. Each firm is expected to have earnings before interest of $70,000 in perpetuity. Neither firm pays taxes. Assume that every investor can borrow at 8 percent per year. a. What is the value of Alpha Corporation? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. What is the value of Beta Corporation? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) c. What is the market value of Beta Corporation's equity? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) d. How much will it cost to purchase 25 percent of each firm's equity? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) e. Assuming each firm meets its earnings estimates, what will be the dollar return to each position in part (d) over the next year? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) a. Value of Alpha b. Value of Beta Market value of Beta's equity d. Alpha c. Beta e. Alpha Beta The Veblen Company and the Knight Company are identical in every respect except that Veblen is unlevered. The market value of Knight Company's 5 percent bonds is $2.3 million. Financial information for the two firms appears here. All earnings streams are perpetuities. Neither firm pays taxes. Both firms distribute all earnings available to common stockholders immediately. Veblen 1,500,000 Knight 1,500,000 Projected operating income Year-end interest on debt Market value of stock 115,000 3,050,000 5,100,000 2,300,000 Market value of debt a-1.What will the annual cash flow be to an investor who purchases 5 percent of Knight's equity? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) a- What is the annual net cash flow to the investor if 5 percent of Veblen's equity is 2. purchased instead? Assume that borrowing occurs so that the net initial investment in each company is equal. The interest rate on debt is 5 percent per year. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) a-1. Cash flow a-2. Net cash flow