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You are considering a stock investment in one of two firms (AliDebt, Inc, and AlEquity,...

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Accounting

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You are considering a stock investment in one of two firms (AliDebt, Inc, and AlEquity, Inc), both of which operate in the same industry and have identical EBITDA of $16.0 million and operating income of $7.0 million. AllDebt, Inc.. finances its $35 million in assets with $34 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. AliEquity, Inc., finances its $35 million in assets with no debt and $35 million in equity. Both firms pay a tax rate of 21 percent on their taxable income. Calculate the income avallable to pay the asset-funders' investment - (the debt holders and stockholders) and resulting return on assets for the two firms. (Enter your dollor answers in millions of dollars. Round all answers to 3 decimal places.)

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