Question: Case Corp and Western Tech are two identical companies except for their capital structures. Neither firm pays taxes. Case Corp is unlevered and has 7,500

Case Corp and Western Tech are two identical companies except for their capital structures. Neither firm pays taxes. Case Corp is unlevered and has 7,500 shares outstanding, each worth $25. Western Tech is levered and has $45,000 in debt.

1) How much are the assets of Case Corp worth?
2) How much are the assets of Western Tech worth?
3) What is Western Tech's value of equity?
4) How much would it cost to buy 50% of the total equity of each company (in other words, how much would it cost to buy 50% of all shares outstanding for each company)?
5) Is Western Tech more risky than Case Corp? Please explain.

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1 Since Case Corp is unlevered its assets are equal to the market value of its equity Therefore the assets of Case Corp are worth 7500 shares x 25 per ... View full answer

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