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Suppose Hansen Industries and MFF Technology have identical assets that generate identical cash flows. Hansen Industries is an all-equity firm, with 17 million shares outstanding
Suppose Hansen Industries and MFF Technology have identical assets that generate identical cash flows. Hansen Industries is an all-equity firm, with 17 million shares outstanding that trade for a price of $17 per share. MFF Technology has 21 million shares outstanding as well as debt of $47 million. a. According to MM Proposition I, what is the stock price for MFF Technology? b. Suppose MFF Technology stock currently trades for $9.5 per share. What arbitrage opportunity is available? What assumptions are necessary to exploit this opportunity
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