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For B and C. The left drop-down list options are: buy or sell The right drop-down list options are: ABC or XYZ flows of $700
For B and C.
The left drop-down list options are: buy or sell
The right drop-down list options are: ABC or XYZ
flows of $700 or $1,000 each year. After paying any interest on debt, both companies use all remaining free cash flows to pay dividends each year. a. In the table below, fill in the debt payments and equity dividends each firm will receive given each of the two possible levels of free cash flows. b. Suppose you hold 10% of the equity of ABC. What is another portfolio you could hold that would provide the same cash flows? c. Suppose you hold 10% of the equity of XYZ. If you can borrow at 13%, what is an alternative strategy that would provide the same cash flows? nearest integer.) % of debt, and % of equity. the nearest integer.) % of debt, and % of equityStep by Step Solution
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