Question
Suppose Firms A and B have the same amount of assets, pay the same interest rate on their debt, have the same basic earning power
Suppose Firms A and B have the same amount of assets, pay the same interest rate on their debt, have the same basic earning power (BEP), and have the same tax rate. However, Firm A has a higher debt ratio. If BEP is greater than the interest rate on debt, Firm A will have a higher ROE as a result of its higher debt ratio. Is it true? Please, explain in a VERY DETAILED way.
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Machine Learning In Finance From Theory To Practice
Authors: Matthew F Dixon, Igor Halperin, Paul Bilokon
1st Edition
3030410676, 978-3030410674
