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Rickos Rickos
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Adams Inc. expects EBIT of $50 million if there is a recession, $100 million if the economy is normal, and $150 million if the economy expands. Bellingham Inc. also expects EBIT of $50 million if there is a recession, $100 million if the economy is normal, and $150 million if the economy expands. Adams is financed entirely with equity while Bellingham is financed 50% with debt at 10%. Adams has $200 million in equity; Bellingham is financed with $100 million of debt and $100 million of equity. The tax rate is 30%. Both firms pay out all available earnings as dividends. If there is a recession, compare dividends and total distributions to investors for each company.
Textbook 
Financial Management: Principles and Applications

Financial Management: Principles and Applications


Edition: 13th
Authors:
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vanrheevanrhee
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Rickos Author
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7 years ago
You saved my grade for me. I can't thank you enough.
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