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Business, 23.04.2021 19:00 Olaf2018

Two companies, A and B, both have $1 million in assets, earnings before interest and taxes (EBIT) of $160,000, and the same tax rate. Company A is all equity financed, and Company B is 50% debt financed and 50% equity financed. If Company B's pretax cost of debt is 8%, then Company A will have a ROA that is and a ROE that is than Company B's. a. Option D b. Option C c. Option B d. Option A

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