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Consider three companies X, Y, and Z that are in the same line of business and have the same market capitalization of $20,000,000 and the

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Consider three companies X, Y, and Z that are in the same line of business and have the same market capitalization of $20,000,000 and the same share prices of $20. Company A has no debt. Company B has $4,000,000 of debt, and Company C has $12,000,000 of debt. Interest rate is 8%. Determine the number of shares of each company. Determine ROA. ROE and Warnings Per Share (EPS) for each company if EBIT is $2,000,000 and there are no taxes Determine EBIT for which ROE and Earnings Per Share of Company X and Company Z will be the same. What is ROE and framings Per Share of Company Y in this case? Suppose we have invested $1000 in company X but would like to have a return as if we have invested in company Z. What should we do to achieve this goal? (assume EBIT will be as before) Suppose we have 500 shares of company Z but would like to have a return as if we have invested in company Y. What should we do to achieve this goal? (assume EBIT will be as before)

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