Question: Using the data below, find i) The return on equity ii) The value of the firm using the M&M Propositions. Equity Value ........................................................$5,000,000 Debt Value

Using the data below, find

i) The return on equity

ii) The value of the firm using the M&M Propositions.

Equity Value ........................................................$5,000,000

Debt Value ...........................................................$4,000,000

Corporate Tax Rate ..........................................................0%

Cost of Equity Capital for the Unlevered Firm .............12%

Cost of Debt Capital .........................................................7%


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