Question
Firms A and B are twins. That means their cash flows from their business activities (revenues, costs, depreciation etc.) are same. Their capital structures may
Firms A and B are twins. That means their cash flows from their business activities (revenues, costs, depreciation etc.) are same. Their capital structures may be different. You find that equity beta of A is 1.2 and the equity beta of B is 0.8. The corporate tax rate is 30%. Would the two firm values be same or is A more valuable or is B more valuable? Why?
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Fundamentals Of Corporate Finance
Authors: David W Blackwell, Robert Parrino, David S Kidwell
1st Edition
0471270563, 9780471270560
