Considering the following financial information for Atlas Awesome Manufacturing, Inc. and Delilah Superior Manufacturing Inc. Both companies...

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Finance

Considering the following financial information for AtlasAwesome Manufacturing, Inc. and Delilah Superior Manufacturing Inc.Both companies are in the same industry and have identicaloperating income of $8.4 million. Atlas finances its $15 million inassets with $2 million debt ( on which it pays 9 percent interest)and 13 million in equity. Delilah finances its $15 million inassets with $12 million in debt ( on which it pays 8 percentinterest). Both companies pay 32 percent tax on their taxableincome.
Calculate the following:
A. Each firms net income
B. The income each firm has available to pay its debt holdersand stock holders (the firms asset funders)
C. The returns available to the asset funders on theirinvestment in each company (the return on asset-fundersinvestment)
D. Which company offers a higher return on investment to itsasset funders? Explain why this company is able to offer a higherrate of return on investment to its asset funders.
Please show all calculations in digital typed format.Please don't use hand writing.
Also please answer all A,B,C,D. Thank you somuch.

Answer & Explanation Solved by verified expert

4.4 Ratings (764 Votes)

A Formula of net income calculation is as below Net income Operating income interest expense1tax rate Net income for Atlas Awesome Manufacturing Inc Net income 84 million 2 million91032 84 018068 822068 55896 million Net Income for Delilah Superior Manufacturing Inc Net income 84 million 12 million81032 84 096068 744068 See Answer

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