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QUESTION
Your all equity firm has a 60% chance of producing exp. cash flows of $7M in perpetuity and a 40% chance of producing exp. cash flows of $14.50M in...
Your all equity firm has a 60% chance of producing exp. cash flows of $7M in perpetuity and a 40% chance of producing exp. cash flows of $14.50M in perpetuity. These cash flows are unrelated to the state of the economy and investors have access to a risk free rate of 5%. What is the value of your all equity firm?
