Question

You are considering a stock investment in one of two firms (NoEquity, Inc., and NoDebt, Inc.), both of which operate in the same industry and have identical EBITDA of $38.7 million and operating income of $22.5 million. NoEquity, Inc., finances its $80 million in assets with $79 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Inc., finances its $80 million in assets with no debt and $80 million in equity. Both firms pay a tax rate of 21 percent on their taxable income. Calculate the net income and return on assets-funders' investments-for the two firms. (Enter your dollar answers in millions of dollars. Round "Net income" answers to 3 decimal places and "Return on assets" answers to 2 decimal places.)

          You are considering a stock investment in one of two firms (NoEquity, Inc., and NoDebt, Inc.), both of which operate in the same industry and have identical EBITDA of $38.7 million and operating income of $22.5 million. NoEquity, Inc., finances its $80 million in assets with $79 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Inc., finances its $80 million in assets with no debt and $80 million in equity. Both firms pay a tax rate of 21 percent on their taxable income.
Calculate the net income and return on assets-funders' investments-for the two firms. (Enter your dollar answers in millions of dollars. Round "Net income" answers to 3 decimal places and "Return on assets" answers to 2 decimal places.)

you are considering a stock investment in one of two firms noequity inc and nodebt inc both of which operate in the same industry and have identical ebitda of 387 million and operating incom 89392

Added by Robert A.

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