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What value would MM estimate for each firm? Firm U and Firm L are identical in every respect except that U is unlevered while L

image text in transcribed What value would MM estimate for each firm?

Firm U and Firm L are identical in every respect except that U is unlevered while L has $10 million of 5% bonds outstanding. Assume that all of the MM assumptions are met, there are no corporate or personal taxes, EBIT is $2 million, and the cost of equity to Company U is 10%

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