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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 $38.5 million and operating income of $24.5 million. NoEquity, Incorporated, finances its $70 million in assets with $69 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Incorporated, finances its $70 million in assets with no debt and $70 million in equity. Both firms pay a tax rate of 21 percent on their taxable income.
Calculate the net income and return on assetsfunders investmentsfor the two firms.

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