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Consider two firms, With and Without, that have identical assets that generate identical cash flows. Without is an all-equity firm, with 1 million shares outstanding that trade for a price of $24 per share. With has 2 million shares outstanding and $12 million dollars in debt at an interest rate of 5%.
-Assume that MM's perfect capital markets conditions are met and that you can borrow and lend at the same 5% rate as with.You have $5000 of your own money to invest and you plan on buying With stock.Using homemade (un) leverage you invest enough at the risk-free rate so that the payoff of your account will be the same as a $5000 investment in Without stock? The number of shares of With stock you purchased is closest to:
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Projections of costs that fluctuate with changes in production volume or activity levels, such as materials and labor.
Net Operating Income
A measure of a company's profitability, calculated as the revenue from operations minus the operating expenses, excluding interest and taxes.
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A metric in property management that multiplies the number of tenants by the number of days they occupy a space, useful for tracking occupancy and usage.
Planning Budget
A budget created at the beginning of a budgeting period, based on projected values and assumptions for that period.
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