Unl Inc and Lev Corp are identical in every way, except for their capital structure.

Unl Inc. is an all equity firm, un$-$levered, with $100,000$ shares outstanding currently

trading at $$40$ per share. Lev has $$1,000,000$ debt paying $6\%$ annual interest, it has

$100,000$ shares outstanding. Anyone, corporation or individuals can borrow or lend

freely at the same $6\%$ rate. Both companies EBIT is $$300,000.$ There are no taxes.

a$.$ What is the value of Unl Inc.?

b$.$ What is the value of Lev Corp?

c$.$ What is Lev equity value? And price per share?

d$.$ An investor currently own $10\%$ of Unl equity. What is his holding $ value.

e$.$ The investor would like to sell his Unl holding and buy $10\%$ of Lev Corp equity. How

much does he need to borrow or lend?

f$.$ Both companies payout all their EBT as dividend $($no taxes, Lev has to pay interest$).$

What was the investor income if had had stayed with Unl shares? What is his income in

his new Lev portfolio $($remember he has to pay interest$)?$