Value of the firm under each of the financing plan

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Reference no: EM131937441

Company is evaluating two financing plans under the following conditions. The expected EBIT is $ 1 Million. The cost of debt is 10 % for both plans ,The corporate tax rate , Tc is 34%. Unlevered firms in the same industry have a cost of capital of 20%. What is the difference of total CFs under two financing plans ? Where does this difference come from? What is the value of the firm under each of the financing plan.

Reference no: EM131937441

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