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According to the Static Tradeoff Theory, which firm should have a higher debt to asset (D/A) ratio?Explain! Firm AFirm B Revenue$144 b$12.4 b Expected Tax

According to the Static Tradeoff Theory, which firm should have a higher debt to asset (D/A) ratio?Explain!

Firm AFirm B

Revenue$144 b$12.4 b

Expected Tax Rate10%20%

Profit Margin12%6%

Business Risk (Asset Beta)0.850.60

Market Value of Equity$90 b$850 m

Tangible to Total Assets Ratio40%60%

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