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Beta Industries and Gamma Technology have identical assets that generate identical cash flows. Beta Industries...

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Finance

Beta Industries and Gamma Technology have identical assets that generate identical cash flows. Beta Industries has 30 million shares outstanding that trade for a price of $20 per share, and debt of $100 million. Gamma Technology is an all-equity firm with 35 million shares outstanding.

1. In the perfect world (no taxes, etc.), what is the stock price for Gamma Technology?

2. In the (almost) perfect world with taxes what can you say about the relative values of the two companies? Are they same? If not, which one has a greater value? Why?

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