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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 operating income of $12.5 million. NoEquity, Inc., finances its $70 million in assets with $69 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Inc., finances its $70 million in assets with no debt and $70 million in equity. Both firms pay a tax rate of 30 percent on their taxable income.
Calculate the net income and return on assets for the two firms. (Enter your dollar answers in millions of dollars. Round all answers to 2 decimal places.) No Equity No Debt Net income $ m $ m Return on assets % %
Which of the following is a disadvantage of a private placement when compared to other methods of selling new securities?
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Examination of an existing data base or combination of bases in an effort to establish some cause-and-effect relationship between the variables examined.
During the year, the Senbet Discount Tire Company had gross sales of $1.06 million. The firm’s cost of goods sold and selling expenses were $525,000 and $215,000, respectively. Senbet also had notes payable of $800,000. These notes carried an interes..
A rich uncle passed away, his will states that you will receive 2 payments of $40,000 each year. The first payment will occur exactly a year from now. Your cousin offers to purchase your 2 payments of $40,000. With a 10% annual interest rate compound..
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