Principles of Corporate Finance

M&M Proposition II

101500 , 000.^15

market value of all securities
rE rA expected^ operating^ income

= =

= =

rE =rA +VD (rA −rD)

( )

. 20 or 20%
. 15. 10
5000

5000

. 15

=

rE = + −

Macbeth continued