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Company A and Company B are identical in all regards except that during Year 1 Company A borrowed $40,000 at an interest rate of 10%.
Company A and Company B are identical in all regards except that during Year 1 Company A borrowed $40,000 at an interest rate of 10%. In contrast, Company B obtained financing by acquiring $40,000 from sale of common stock Company B agreed to pay a $4,000 cash dividend each year. Both companies are in a 30% tax bracket. Which company would show the greater retained earnings at the end of Year 1. and by what amount? Multiple Choice O Company A's retained earnings would be higher by $4.6 0 Company B's retained earnings would be higher by O Company A's retained earnings would be higher by
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