Dear exparts,

Please teach me the following question.

Firms X and Y have identical assets, sales, interest rates paid on their deft, tax retes, and EBIT. However, X uses more debt than Y. Which of the following statements is correct? Why is the reason?

a. X would have the higher net income.

b. We cannnot tell if X or Y would have higher or lower net income.

c. X would have the lower equity multiplier for use in the DuPont equation.

d. X would have to pay more in income taxes.

e. X would have the lower net income as shown on the income statement.