Firms A and B are essentially identical having made the same operating, investing and financing decisions....

 

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Firms A and B are essentially identical having made the same operating, investing and financing decisions. Neither firm engages in any investing activities during 2023. 1. Does one firm have higher income than the other in 2023? Why? 2. Assuming both firms make the same operating and financing decisions over the foreseeable future and neither firm engages in investing activity, will the same firm continue to have higher income for the foreseeable future (say each year 2024-2030)? Why? 3. With the same assumptions, which firm will have the higher total income over the foreseeable futu 2024-2030 inclusive)? 2022 2023 Firm A PP&E, net PP&E, net 1,000,000 820,000 2022 2023 Firm B PP&E, net PP&E, net 1,000,000 600,000 Firms A and B are essentially identical having made the same operating, investing and financing decisions. Neither firm engages in any investing activities during 2023. 1. Does one firm have higher income than the other in 2023? Why? 2. Assuming both firms make the same operating and financing decisions over the foreseeable future and neither firm engages in investing activity, will the same firm continue to have higher income for the foreseeable future (say each year 2024-2030)? Why? 3. With the same assumptions, which firm will have the higher total income over the foreseeable futu 2024-2030 inclusive)? 2022 2023 Firm A PP&E, net PP&E, net 1,000,000 820,000 2022 2023 Firm B PP&E, net PP&E, net 1,000,000 600,000

Answer rating: 100% (QA)

1 No both firms would have the same income in 2023 The firms are described as being essentiall... View the full answer