If Firm U Is Unlevered and Firm L Is Levered

question 63

Multiple Choice

If firm U is unlevered and firm L is levered, then which of the following is true?

• A)V_U = E_U only.
• B)V_U = E_U and V_L = E_L + D_L.
• C)V_U = E_U, V_L = E_L + D_L, and V_L = E_U + D_L.
• D)V_L = E_U + D_L only.

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