Use the information for the question(s)below.
Consider two firms, With and Without, that have identical assets that generate identical cash flows. Without is an all-equity firm, with one million shares outstanding that trade for a price of $24 per share. With has two million shares outstanding and $12 million 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 $5 000 of your own money to invest and you plan on buying With shares. 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 $5 000 investment in Without shares. The number of shares of With you purchased is closest to:
A)425
B)100
C)825
D)1 650

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The Answer of Use the information for the question(s)below.
Consider two firms, With and Without, that have identical assets that generate identical cash flows. Without is an all-equity firm, with one million shares outstanding that trade for a price of $24 per share. With has two million shares outstanding and $12 million 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 $5 000 of your own money to invest and you plan on buying With shares. 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 $5 000 investment in Without shares. The number of shares of With you purchased is closest to:
A)425
B)100
C)825
D)1 650

Use the Information for the Question(s)below