Firms U and L each have the same amount of assets, investor-supplied capital, and both have a return on investors' capital (ROIC) of 12%. Firm U is unleveraged, i.e., it is 100% equity financed, while Firm L is financed with 50% debt and 50% equity. Firm L's debt has an after-tax cost of 8%. Both firms have positive net income and a 35% tax rate. Which of the following statements is CORRECT?
A. The two companies have the same times interest earned (TIE) ratio.
B. Firm L has a lower ROA than Firm U.
C. Firm L has a lower ROE than Firm U.
D. Firm L has the higher times interest earned (TIE) ratio.
E. Firm L has a higher EBIT than Firm U.
Answer: B
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Answer the following statements true (T) or false (F)
1. Standard environmentalism refers to the level of environmentalism practiced by most corporations. 2. With carbon capture and storage (CCS) , carbon dioxide emissions are captured and injected into underground formations. 3. Credits purchased from other corporations or organizations to mitigate greenhouse gases released into the environment are called a carbon tax. 4. Greenwashing is the permeation of "green" or environmental concerns throughout all organizational divisions in a corporation. 5. Greenwashing is considered a "token response" to environmental concerns.
Which best describes the reason situational leadership is so practical for managers to use?
A. it assists in relating demographics to leadership B. it is only applicable to lower-level managers C. it is straightforward D. it is specific
2/28 mortgages have a below market interest rate for some initial period because
A) the lender expects to receive higher payments after the readjustment. B) the borrower has a high credit score. C) initial rates are subsidized by the government. D) the lender shares in the appreciation in the market value of the home.
A positive profitability index indicates a positive net present value.
Answer the following statement true (T) or false (F)