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please. answer all parts, thank you Suppose there are no taxes. Firm ABC has no debt, and firm XYZ has debt of $3,000 on which
please. answer all parts, thank you
Suppose there are no taxes. Firm ABC has no debt, and firm XYZ has debt of $3,000 on which it pays interest of 12% each year. Both companies have identical projects that generate free cash flows of $800 or $1,100 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 12%, what is an alternative strategy that would provide the same cash flows? a. In the table below, fill in the payments debt and equity holders of each firm will receive given each of the two possible levels of free cash flows. (Round to the nearest dollar.) b. Suppose you hold 10% of the equity of ABC. What is another portfolio you could hold that would provide the same cash flow? (Select from the drop-down menus and round to the nearest integer.) % of debt, and % of equity. c. Suppose you hold 10% of the equity of XYZ. If you can borrow at 12%, what is an alternative strategy that would provide the same cash flow? (Select from the drop-down menus and round to the nearest integer.) % of debt, and % of equityStep by Step Solution
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