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Consider three companies A. B, and C that are in the same line of business and have the same market capitalization of $10,000,000 and the

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Consider three companies A. B, and C that are in the same line of business and have the same market capitalization of $10,000,000 and the same share prices of $10. Company A has no debt. Company B has $2,000,000 of debt, and Company C has $6,000,000 of debt. Interest rate is 8%. Determine the number of shares of each company. Determine ROA, ROE and Earnings Per Share (EPS) for each company if EBIT is $1,000,000 and there are no taxes Determine EBIT for which ROE and Earnings Per Share of Company A and Company C will be the same. What is ROE and Earnings Per Share of Company B in this case? Suppose we have invested $1000 in company A but would like to have a return us if we have invested in company B. What should we do to achieve this goal? (assume EBIT will be as before) Suppose we have 500 shares of company C but would like to have a return as if we have invested in company A. What should we do to achieve this goal? (assume EBIT will be as before)

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