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You are considering a stock investment in one of two firms ( NoEquity , Incorporated, and NoDebt, Incorporated ) , both of which operate in

You are considering a stock investment in one of two firms (NoEquity, Incorporated, and NoDebt, Incorporated), both of which operate in the same industry and have identical EBITDA of $38.7 million and operating income of $22.5 million. NoEquity, Incorporated, finances its $80 million in assets with $79 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Incorporated, finances its $80 million in assets with no debt and $80 million in equity. Both firms pay a tax rate of 21 percent on their taxable income.
Calculate the net income and return on assets-funders' investments-for the two firms.
Note: Enter your dollar answers in millions of dollars. Round "Net income" answers to 3 decimal places and "Return on assets" answers to 2 decimal places.
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