Levered, Inc., and Unlevered, Inc., are identical in every way except their capital structures. Each company expects to earn $16 million before interest per year in perpetuity, with each company distributing all its earnings as dividends. Levered's perpetual debt has a market value of $60 million and costs 8 percent per year. Levered has 1.8 million shares of stock outstanding that sell for $101 per share. Unlevered has no debt and 3.4 million shares outstanding, currently worth $72 per share. Neither firm pays taxes.

Is Levered's stock a better buy than Unlevered's stock? How to go about this question if we were to add the "Capital Structure Arbitrage" (and assume 10% ownership in the analysis) component?