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Below Is Information for Year Ended 12/31/05 for Company a and Company

Question 68

Multiple Choice

Below is information for year ended 12/31/05 for Company A and Company B.  Company A  Company B  Interest expense $400$ Tax expense (40%) 400400 Net income 600600 Total assets −12/31/0510,00010,000 Total debt 5,0000 Equity 5,00010,000\begin{array}{lrr}&\text { Company A }&\text { Company B }\\\text { Interest expense } & \$ 400 & \$ \\\text { Tax expense }(40 \%) & 400 & 400 \\\text { Net income } & 600 & 600 \\\text { Total assets }-12 / 31 / 05 & 10,000 & 10,000 \\\text { Total debt } & 5,000 & 0 \\\text { Equity } & 5,000 & 10,000\end{array}
-Return on assets for Company A and B for 2005 are:  Company A  Company B  A)  5%5% B)  8.4%6% C)  14%6% D)  10%10%\begin{array}{rrr}&\text { Company A }&\text { Company B }\\\text { A) } & 5 \% & 5 \% \\\text { B) } & 8.4 \% & 6 \% \\\text { C) } & 14 \% & 6 \% \\\text { D) } & 10 \% & 10 \%\end{array}


A) Option A
B) Option B
C) Option C
D) Option D

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