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10.6 points) According to the Static Tradeoff Theory, which firm should have a higher debt to asset (D/A) ratio? Explain! Revenue Expected Tax Rate Profit

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10.6 points) According to the Static Tradeoff Theory, which firm should have a higher debt to asset (D/A) ratio? Explain! Revenue Expected Tax Rate Profit Margin Business Risk (Asset Beta) Market Value of Equity Tangible to Total Assets Ratio Firm A $144 b 10% 12% 0.85 $90 b 40% Firm Be $12.4 b 20% 6% 0.60 $850 m 60% 10.6 points) According to the Static Tradeoff Theory, which firm should have a higher debt to asset (D/A) ratio? Explain! Revenue Expected Tax Rate Profit Margin Business Risk (Asset Beta) Market Value of Equity Tangible to Total Assets Ratio Firm A $144 b 10% 12% 0.85 $90 b 40% Firm Be $12.4 b 20% 6% 0.60 $850 m 60%

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