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You have the following information about two firms Debt Free Inc and Debt Spree Inc Both firms have the same prospects for sales and EBIT and both have the same level of assets tax rate and

You have the following information about two firms, Debt Free, Inc. and Debt Spree, Inc. Both firms have the same prospects for sales and EBIT, and both have the same level of assets, tax rate and borrowing rate. They differ in their use of debt financing. Calculate the interest expense for each firm: Interest expense for Debt Free Interest expense for Debt Spree Calculate the following items for each firm for each scenario (bad year, normal year, good year): return on assets (ROA), net profit, and return on equity (ROE). Use a minus sign to indicate negative answers. Round your answers to 2 decimal places.)

 

Apr 23 2020 View more View Less

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