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de give following information about A, an unlevered firm: Market value of equity $60000 Asset cost of capital 6% You are also given the following

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de give following information about A, an unlevered firm: Market value of equity $60000 Asset cost of capital 6% You are also given the following information about B, a levered firm: Market value of equity $36000 Market value of debt $22000 Asset of capital 796 Debt cost of capital 4% cos A and B have identical assets and future cash flows. The corporate tax rate is 35% and the costs of bankruptcy are $2000. For firm B. X is the present value of interest tax shield and Y is the total present value of financial distress costs. Determinc X-Y. Possible Answers -2000 B-1000 c0 D 1000 E 2000

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