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Firm U has an EBIT of $10 million and is 100% equity financed while Firm L, which also has an EBIT of $10 million, uses

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Firm U has an EBIT of $10 million and is 100% equity financed while Firm L, which also has an EBIT of $10 million, uses $100,000 as debt in its capital structure. The interest rate is 6% p.a. and both firms are subject to a 25% tax rate. Based on this information, which of the following is true? O a. The value of firm L exceeds the value of firm U by $1,500 O b. The cash flow for firm L is $7,501,500 O c. The tax paid by firm L is $2,500,000 d. The value of firm Lis the same as the value of firm U e. Firm U pays lesser tax than Firm

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