Question: Firm A and firm B have the same expected returns, but different methods of financing. Firm A has taken on debt in t = 0
Firm A and firm B have the same expected returns, but different methods of financing. Firm A has taken on debt in t = 0 and has to pay back 18735158.0864 in t = 5. Firm A has also issued 100000 shares in t = 0. Firm B has no debt, but has issued 120000 shares. Each share of firm B cost $250 when issued in t = 0. The annual interest rate is 6%. How much did one share of firm A cost when it was issued?
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