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Question: There are two firms A and B which are exactly identical except that A...

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Finance

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There are two firms A and B which are exactly identical except that A does not use any debt in its financing, while B has Rs. 2,50,000, 6% Debentures in its financing. Both the firms have earnings before interest and tax of Rs. 75,000 and the equity capitalization rate is 10%. Assuming the corporation tax is 50%, calculate the value of the firm.

Please explain and do not copy from Chegg. Otherwise, I have to report the answer.

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