WHAT IS THE DOLLAR VALUE CAPITAL STRUCTURE MIX FOR 2 COMPANIES:

The BA720 Company has $15 million in pretax income, a tax rate of 30%, and a capital structure mix that is comprised of 78% in equity and 22% million in long term debt [market value basis]. The cost of debt is 9% and cost of equity is 12%. WACC = 10.75%

AND The AB300 Company is identical to the BA720 Company (information in previous problem) in every respect save two: it is debt free and its cost of equity is 11.5%.