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Below is information for year ended 12/31/00 for Company A and Company B. Use this information to solve the Questions 1, 2, 3, and 4
Below is information for year ended 12/31/00 for Company A and Company B. Use this information to solve the Questions 1, 2, 3, and 4 below: ---Company A--- Interest expense: $ 400 Tax expense (40%): $ 400 Net income: $ 600 Total assets 12/31/02: $ 10,000 Total debt: $ 5,000 Equity: $ 5,000 ---Company B--- Interest expense: $ 0 Tax expense (40%): $ 400 Net income: $ 600 Total assets 12/31/02: $ 10,000 Total debt: $ 0 Equity: $ 10,000 1. Return on assets for Company A and B for 2002 are: A) Company A: 6%; Company B: 6% B) Company A: 8.4%; Company B: 6% C) Company A: 14%; Company B: 10% D) Company A: 10%; Company B: 10%
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