The Day Company and the Knight Company are identical in every
respect except that Day is not levered. Financial information for
the two firms appears in the following table. All earnings streams
are perpetuities, and neither firm pays taxes. Both firms
distribute all earnings available to common stockholders
immediately. Day Knight Projected operating income $ 1,200,000 $
1,200,000 Year-end interest on debt − $ 100,000 Market value of
stock $ 4,500,000 $ 2,750,000 Market value of debt − $ 2,000,000...