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l. Both company ABC and XYZ have total assets $100 million. While company ABC is 100 percent equity financed, company XYZ is 50 percent equity

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l. Both company ABC and XYZ have total assets $100 million. While company ABC is 100 percent equity financed, company XYZ is 50 percent equity financed and 50 percent debt financed. + Following table shows financial performance information of company ABC- Economic Sales conditions (S millions). EBIT ($ millions)- ROANet Profit ROE (% per year) | ($ millions). (% per year) Bad year 80 Normal 100 yeare Good year 12015 30 6a 10. 10. 159 Following table shows information of company XYZ- ROA Net Profit ROE% Sales (S millions)-| (S millions)| (% per EBIT | ($ millions).| per year year) Bad year 80 Normal 1 Good year 120 100 10- 15 15+ Note that what we mean by net profit here is actually net income)" a) Calculate net profits and ROEs of XYZ at different economic conditions. Note that XYZ borrowed at 6 percent annual interest rate. * which cornpany should perform better if the condition of economy becomes"bad" and why? b)

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