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Ava's SpinBall Corp. lists fixed assets of $12 million on its balance sheet. The firm's fixed assets have recently been appraised at $16 million. Ava's

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Ava's SpinBall Corp. lists fixed assets of $12 million on its balance sheet. The firm's fixed assets have recently been appraised at $16 million. Ava's SpinBall Corp's balance sheet also lists current assets at $5 million. Current assets were appraised at $6 million. Current liabilities' book and market values stand at $3 million and the firm's book and market values of long-term debt are $7 million. You are considering a stock investment in one of two firms (AllDebt, Inc. and AllEquity, Inc.), both of which operate the same industry and have identical operating income of $12.5 million. AllDebt, Inc. finances its $25 million in assets with $24 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. AllEquity, Inc. finances its $25 million in assets with no debt and $25 million in equity. Both firms pay a tax rate of 30 percent on ts their taxable income. Ava's SpinBall Corp. lists fixed assets of $12 million on its balance sheet. The firm's fixed assets have recently been appraised at $16 million. Ava's SpinBall Corp's balance sheet also lists current assets at $5 million. Current assets were appraised at $6 million. Current liabilities' book and market values stand at $3 million and the firm's book and market values of long-term debt are $7 million. You are considering a stock investment in one of two firms (AllDebt, Inc. and AllEquity, Inc.), both of which operate the same industry and have identical operating income of $12.5 million. AllDebt, Inc. finances its $25 million in assets with $24 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. AllEquity, Inc. finances its $25 million in assets with no debt and $25 million in equity. Both firms pay a tax rate of 30 percent on ts their taxable income

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