Use the Information for the Question(s) Below

question 13

Essay

Use the information for the question(s) below.
Consider two firms: firm Without has no debt, and firm With has debt of $10,000 on which it pays interest of 5% per year. Both companies have identical projects that generate free cash flows of $1000 or $2000 each year. Suppose that there are no taxes, and after paying any interest on debt, both companies use all remaining cash free cash flows to pay dividends each year.
-Fill in the table below showing the payments debt and equity holders of each firm will receive given each of the two possible levels of free cash flows:

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Definitions:

ATP Molecules

Adenosine Triphosphate molecules, the primary energy carriers in cells.

MyPlate

A visual guide created by the USDA to help Americans eat a healthier diet, which emphasizes the importance of proportioning different food groups on a plate.

USDA

United States Department of Agriculture, an agency overseeing food safety, agriculture, and related issues.

Healthful Meal

A meal that provides the necessary nutrients for good health, balancing proteins, fats, carbohydrates, vitamins, and minerals.