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The two firms have the same level of total assets and expected net operating profit after taxes (NOPAT), but they differ in two critical characteristics:
The two firms have the same level of total assets and expected net operating profit after taxes (NOPAT), but they differ in two critical characteristics: total debt and the standard deviation of the expected NOPAT. The following table outlines some of Lost Pigeon's and Purple Tiger's major attributes: Lost Pigeon Total assets Total debt Expected NOPAT Standard deviation of expected NOPAT Purple Tiger Manufacturing Inc. Production Inc. $4,800,000 $2,160,000 $1,152,000 $206,400 $4,800,000 $1,104,000 $1,152,000 $321,600 Use the given financial data to indicate which firm has the higher degree of each type of risk. Which firm has more financial risk? Which firm has more business risk? O Lost Pigeon O Purple Tiger O Lost Pigeon O Purple Tiger
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