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Part 11 Question 2 Company A and B ditfer ONLY in their capital structure A is financed 20% debt and 800 equity and B is

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Part 11 Question 2 Company A and B ditfer ONLY in their capital structure A is financed 20% debt and 800 equity and B is firanced 100 . debt and pos equity. The debt of both companies is risk-free. Notations: Firm Value : firm A=firmB=V Profit : firm A= firm B - proft Firm A debt value :D(A) Firm B debt value: D(B) Risk froe rate of retum : rr a) Ray owns 10% of the common stock of firm A. What other investment package would produce identical cash flow tor Ray? Show the two investment strategies are identical, And discuss why you can construct an investment package with the identical cash flow. (7 points)

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