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Assume two companies A and B have similar cash flows and assets. Company A is levered firm while B is an unlevered firm. Table below
Assume two companies A and B have similar cash flows and assets. Company A is levered firm while B is an unlevered firm. Table below provides further information of these companies. Company A Debt- $12 million Company B Debt-0 Shares outstanding= 2 million Cost of debt-5 percent Shares outstanding= 1 million Share price= $24 According to MM Proposition I, what is the value of the firm A's stock
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