Firm abcs assets are financed entirely with equity and firm


Firm ABC and Firm XYZ each have the same amount of assets and net income, but Firm ABC’s assets are financed entirely with equity and Firm XYZ is financed half with debt. Which one has the higher return on equity?

There is not enough information to tell.

Firm XYZ

Firm ABC

Return on equity will be the same.

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Financial Management: Firm abcs assets are financed entirely with equity and firm
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