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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.
Isostatic Rebound
The rise of land masses after the removal of the weight of ice sheets or glaciers, a process of Earth’s crust returning to its equilibrium position over geological time scales.
West Antarctica
The portion of Antarctica that lies west of the Transantarctic Mountains, known for its ice sheets and dynamic glacial activity.
Global Sea Levels
Refers to the average height of the ocean's surface between the high and low tide, which has been rising due to climate change.
Isostatic Rebound
The rise of land masses that were depressed by the huge weight of ice sheets during the last glacial period, leading to adjustments in the Earth's crust.
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