Question: 3;- Solutions to Self- correction Problems Net operating income $ 360,000 Overall capitalization rate .18 Total value of firm $2,000,000 Market value of debt (50%)

3;- Solutions to Self- correction Problems Net operating income $ 360,000 Overall capitalization rate .18 Total value of firm $2,000,000 Market value of debt (50%) 1,000,000 Market value of stock (50%) $1,000,000 Net operating income $ 360,000 Interest on debt (8%) 80,000 Earnings to common $ 280,000 2% of $280,000 = $5,600

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