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ABC Co. and XYZ Co. are identical firms in all respects exce

Thesis Help Finance ABC Co. and XYZ Co. are identical firms in all respects exce

Finance

ABC Co. and XYZ Co. are identical firms in all respects exce

ABC Co. and XYZ Co. are identical firms in all respects except for their capital structure. ABC is a… Show more ABC Co. and XYZ Co. are identical firms in all respects except for their capital structure. ABC is all equity financed with $450,000 in stock. XYZ uses both stock and perpetual debt; its stock is worth $225,000 and the interest rate on its debt is 6 percent. Both firms expect EBIT to be $51,000. Ignore taxes. Rico owns $22,500 worth of XYZ’s stock. What rate of return is he expecting? • Show less

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