Question: Just the Return on assets is incorrect. You are considering a stock investment in one of two firms (NoEquity, Inc., and NoDebt, Inc.), both of

Just the Return on assets is incorrect. You are considering a stockJust the Return on assets is incorrect.

You are considering a stock investment in one of two firms (NoEquity, Inc., and NoDebt, Inc.), both of which operate in the same industry and have identical EBITDA of $39.2 million and operating income of $17.5 million. NoEquity, Inc., 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, Inc., 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 assets-funders' investments-for the two firms. (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.) NoDebt NoEquity 8.370 million Net income $ $ 13.830 million 19.76 % Return on assets 11.95%

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