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Business, 26.08.2019 22:30 tshort2000oyreb1

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. firm l has a lower roe than firm u. b. the two companies have the same times interest earned (tie) ratio. c. firm l has a lower roa than firm u. d. firm l has the higher times interest earned (tie) ratio. e. firm l has a higher ebit than firm u.

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