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Calculate the equity multiplier

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Reference no: EM132820860

You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $30 million in assets with $29 million in debt and $1 million in equity. LotsofEquity, Inc. finances its $30 million in assets with $1 million in debt and $29 million in equity.

Problem 1: Calculate the debt ratio. (Round your answers to 2 decimal places.)

Problem 2: Calculate the equity multiplier. (Round your answers to 2 decimal places.)

Problem 3: Calculate the debt-to-equity.

Reference no: EM132820860

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