Which of company x and company y

Both the firms earn 20 per cent operating profit on their total assets of Rs 15 lakhs. Assume perfect capital markets, rational investors and so on; a tax rate of 35 per cent and capitalisation rate of 15 per cent for an all-equity company. Questions Courses. Company X and Company Y are in the same risk class, and are identical in every respect except that.. Feb 05 AM. Sapna G answered on February 07, Do you need an answer to a question different from the above? Ask your question! We want to correct this solution.

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No problem, unsubscribe here. Go to My Error Log Learn more. Hello Guest! Signing up is free , quick, and confidential. Thinking of rules such as "This equation has 2 variables and therefore I can't solve it" although watch out for those cunning situations in which one variable cancels out for some reason is what you need to do.

When I see the question here, I think "I need some information about the comparative revenues, and comparative costs of these two companies to answer this question". Therefore I can eliminate answers A, D, and B pretty quickly. Spending some time checking between C and E is okay here. Perhaps the clue you're looking for is that there is no number fixed to 'expenses'.

Without actually picking numbers, you can just think of extremes: if the companies have enormous expenses, then the gap between the companies expenses will be big; alternatively, if the revenues are tiny, then the gap will also be tiny.