What is the total cash returned to investors each year

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Reference no: EM132031020

You are investing in an asset that generates $1,000 (pre-tax) in perpetuity and the corporate tax rate is 35%.You are looking at two capital structures:

1) 100% equity

2) 50% debt (interest expense = $250) and 50% equity

All net income is distributed as a dividend to equity. What is the total cash returned to investors each year?

Reference no: EM132031020

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