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EnterRevisit LaterCompany U 0 1 2 . 5 % Company L 1 0 % 1 3 % a . Assuming no taxes, compute the market

EnterRevisit LaterCompany U012.5%Company L10%13%a. Assuming no taxes, compute the market values of both the companies.b. Identify the arbitrage opportunity with respect to the market values of both the companies.c. How can you exploit the arbitrage opportunity, substituting home-made leverage for the corporateQuestion!OT) Two companies have the following profile.2017(6)Debl (Rs.)CouponEquity Capitalisation RateBleverage?

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