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Below are data taken from the financial statements of two companies in the same industry Viola Inc Tuba Co. Total assets $600,000 $600,000 Total liabilities
Below are data taken from the financial statements of two companies in the same industry Viola Inc Tuba Co. Total assets $600,000 $600,000 Total liabilities 0 200,000 Total common equity 600,000 400,000 Income before interest & taxes 100,000 100,000 Taxes 25,000 20,000 Interest rate on liabilities 10% 10% Instructions a) Calculate the ROA and ROE for both companies. Assume total assets and equity have not changed from the previous year. b) As an equity investor, which company would you prefer to invest in
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