Suppose for a firm that the tax rate is 23%, ROA is 7%, and ROE is 10%.
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Question:
Suppose for a firm that the tax rate is 23%, ROA is 7%, and ROE is 10%. What happens to the firm's FCFF under each condition?
a) The firm's account's receivable increases by $100
What formula will you use?
What is the effect?
Show/explain your work.
b) The firm repays a loan of $100.
What formula will you use?
What is the effect?
Showwork
Expert Answer:
Lets analyze each scenario Scenario a Accounts Receivable increases by 100 Formula FCFF EBIT 1 Tax R... View the full answer
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