Question
ABC Inc. is evaluating a project that will require $500,000 in assets. The project is financed with 50% debt and 50% equity and is expected
ABC Inc. is evaluating a project that will require $500,000 in assets. The project is financed with 50% debt and 50% equity and is expected to generate earnings before interest and taxes of $90,000. The firm has a tax rate of 16% and pays 4% interest on the debt. What is the ROE (return on equity) for this project?
| 26.88% | ||
| 18.75% | ||
| 16.00% | ||
| 5.12% |
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Quantitative Analysis for Management
Authors: Barry Render, Ralph M. Stair, Michael E. Hanna, Trevor S. Ha
12th edition
133507335, 978-0133507331
