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Which firm should have the higher CAPM based on the information above, assuming they...

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Finance

imageWhich firm should have the higher CAPM based on the information above, assuming they are both in the same industry and at the same stage in their lifecycle? Explain.

You have the following information about two firms, Debt Free, Inc. and Debt Spree, Inc. Both firms have the same prospects for sales and EBIT, and both have the same level of assets, tax rate and borrowing rate. They differ in their use of debt financing

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