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Problem 14-10 Corporate Debt (LO5) Haricot Corp. and Pinto Corp. both have operating profits of $120 million. Haricot is financed solely by equity, while Pinto
Problem 14-10 Corporate Debt (LO5) Haricot Corp. and Pinto Corp. both have operating profits of $120 million. Haricot is financed solely by equity, while Pinto has issued $170 million of 6% debt. If the corporate tax rate is 30%: Required: a. How much tax does each company pay? b. What is the total payout to investors (debtholders plus shareholders) of each company? Complete this question by entering your answers in the tabs below. Required A Required B How much tax does each company pay? (Enter your answers in million rounded to 1 decimal place.) $ Haricot Pinto Tax Amount 36.0 million million Required A Required B What is the total payout to investors (debtholders plus shareholders) of each company? (Enter your answers in million rounded to 1 decimal place.) Pinto Haricot 0.0 $ Return to debtholders Return to shareholders Total return to investors $ 84.0 million million 0.0 million $ 84.0 $
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