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please answer the 4 blanks!!!! You are considering a stock investment in one of two firms (AllDebt, Inc, and AllEquity, Inc), both of which operate
please answer the 4 blanks!!!!
You are considering a stock investment in one of two firms (AllDebt, Inc, and AllEquity, Inc), both of which operate in the same industry and have identical EBITDA of $16.0 million and operating income of $7.0 million. AllDebt, Inc., finances its $35 million in assets with $34 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. AllEquity, Inc., finances its $35 million in assets with no debt and $35 million in equity. Both firms pay a tax rate of 21 percent on their taxable income. Calculate the income available to pay the asset-funders' investment-(the debt holders and stockholders) and resulting return on assets for the two firms. (Enter your dollar answers in millions of dollars. Round all answers to 3 decimal places.) Step by Step Solution
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