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An all equity firm has a return on assets (ROA) of 14.40 percent. The firm makes the decision to replace 30% of its equity with
An all equity firm has a return on assets (ROA) of 14.40 percent. The firm makes the decision to replace 30% of its equity with debt that has a before-tax cost of 8 percent (the firm's tax rate is 40 percent). Calculate the firm's new ROE after the debt has been issued and equity has been repurchased (hint: leverage effect and tax shield effect). O 17.37% 18.51% O 17.66 % O 17.94% 18.23%
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Dynamics Of International Finance
Authors: Ruchi Mehrotra Joshi
1st Edition
1685078389, 978-1685078386
