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jake82 jake82
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A month ago
James Bay Water Park operates in a world with zero taxes and no financial distress. The firm has a debt/equity ratio of 1. The cost of equity is 15% and the cost of debt is 8%. The only difference between Whispering Pines Resort and James Bay Water Park is that Whispering Pines Resort has a debt/equity ratio of 2. According to M&M, the value of Whispering Pines Resort will be

▸ greater than James Bay Water Park.

▸ less than James Bay Water Park.

▸ the same as James Bay Water Park.

▸ Insufficient information is provided to answer the question.
Textbook 
Corporate Finance

Corporate Finance


Edition: 5th
Author:
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rick32rick32
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A month ago
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jake82 Author
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A month ago
This site is awesome
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Good timing, thanks!
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Thanks
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