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Assume M&M holds and there are no corporate taxes. Consider two firms, Firm X and Firm Y, that have identical assets that generate identical cash
Assume M&M holds and there are no corporate taxes. Consider two firms, Firm X and Firm Y, that have identical assets that generate identical cash flows. Firm Y is an all-equity firm, with 1 million shares outstanding that trade for a price of $22 per share. Firm X has 2 million shares outstanding and $9.7 million in debt at an interest rate of 5%. What is the share price of firm X?
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