Last year, Black Hole Company paid $90 million of interest expense, and its average rate of interest

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Last year, Black Hole Company paid $90 million of interest expense, and its average rate of interest for the year was 15%. The company’s ROE is 20%, and it pays no dividends. Estimate next year’s interest expense, assuming that interest rates will fall by 20% and the company keeps a constant equity multiplier of 25%.

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Fundamentals Of Investing

ISBN: 9780135175217

14th Edition

Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk

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