Which firm's shareholders are wealthier? Explain why. The following are selected financial information on Firm A and Firm B. You are asked to complete the table by methodically calculating the missing information.

You will assume that Cost of Goods Sold (COGS) is 65% of Sales and that the company uses a marginal tax rate of 35%.

                                                Firm A             Firm B

Revenue                     $ 3,000         $ 3,000

COGS (Blank)           (Blank)

Gross Profit 1,050              1,050

Operating Expenses             (300)             (300)

EBIT 750                 750

Interest Expense                   (Blank)           (Blank)

EBT (Blank)           (Blank)

Income Tax @35%               (Blank)           (Blank)

Net Income                            $488               $472

Earnings per share               (Blank)           (Blank)

Dividends per share             (Blank)           (Blank)

Expected Return on Equity (Blank)           (Blank)

Estimated Share Price          (Blank)           (Blank)

Market Value of Equity        (Blank)           (Blank)

Market Value of Debt           (Blank)           (Blank)

Enterprise Value                   $2,181 $2,503

Outstanding Debt                 $     -                $300

Shares Outstanding              600                 300

Cost of Debt                           6%                  8%

Beta                                        1.40                1.70

Expected return on Market 9%                  9%

Dividend pay-out ratio 50%                60%

Dividend growth 2%                  2%

Risk free                                 3%                  3%

Common equity $600               $300

Company’s debt trading @ n/a                  105

Which firm's shareholders are wealthier? Explain why.