textbook example.

Alpha Corporation and Beta Corporation are identical in every way except their capital structures. Alpha Corporation, an all-equity rm. has 10.000 shares of stock outstanding. currently worth $20 per share. Beta Corporation uses leverage in its capital structure. The market value of Beta's debt is $50,000 and its cost ofdebt is B percent. Each rm is expected to have earnings before interest of $?0.000 in perpetuity. Neither rm pays taxes. Assume that every investor can borrow at B percent per year. a. What is the value of Alpha Corporation? [Do not round intermediate calculations and round your answer to the nearest whole number, e.g.. 32.} b. What is the value of Beta Corporation? {Do not round intermediate calculations and round your answer to the nearest whole number, e.g.1 32.} c. What is the market value of Beta Corporation's equity? {Do not round intermediate calculations and round your answer to the nearest whole number. e.g., 32.] d. How much will it cost to purchase 25 percent of each rm's equity? {Do not round Intermediate calculations and round your answer to the nearest whole number. e.g., 32.} e. Assuming each rm meets its earnings estimates. what will be the dollar return to each position in part {d} over the next year? {Do not round Intermediate calculations and round your answer to the nearest whole number. e.g.. 32.} a value of Alpha s arenas a value of Beta 3 31 some a Market value of Bete's equity s T55.000 El_ _