Question: 1. Explain how the following table (TABLE 14.6) can prove MM Proposition I, using the information in the table Unlevered equity Margin loan Levered equity

1. Explain how the following table (TABLE 14.6) can prove MM Proposition I, using the information in the table

Unlevered equity Margin loan Levered equity Date 0 Initial Cost $1000 -$500 $500 Date 1: Cash Flows Strong Economy $1400 '3525 $875 Weak Economy $900 $525 $375

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