Firm A has $10,000.00 in assets entirely financed with equity. Firm B has $10,000.00 in assets, but these assets are financed by $5,000.00 in debt (with 10%  rate of interest) and $5,000.00 in equity. Both firms sell 10.000 units of output at $2.50 per unit. The variable cost are $1.00, and fixed production cost are $12,000.00. What is the operating income (EBIT) for both firms?
asked Nov 22, 2012 in Word Problem Answers by kvboehm (120 points)

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