Question

The following is the data regarding two companies X and Y
belonging to the same risk class:
Company X Company Y
No. of ordinary shares 90,000 150000
Market price per share 1.20 1.00
EBIT 18000 18000
6% Debentures 60,000 -
All profits after debenture interest are distributed as dividends.
Explain how under MM approach an investor holding 10% shares in company
X will be better off in switching his holding to company Y

Answer 1

Answer:

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Explanation:

can you send me the pic of the question then I can answer the question easily.