companies a and b are identical in all respects including risk factors except for the debt equity
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Question:
companies a and b are identical in all respects including risk factors except for the debt equity needs. .company A has 12%debentures 0F shillings 3 m while company B only issued equity capital. Both companies earn 24%before interest and taxes on their total asset of shillings 5 m ,Assuming that the effective tax rate is 40%and the capitalization rate of equity for an all equity company is 18%.compute the value of the two firms using the net income approach and net operating income approach
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