Question
ApubliccompanyhasabalancesheettotalofonemillionEURandatotalreturnonassetsofeightpercent.Theshareofforeigncapitalis90percent,theinterestrateforloancapitalisfivepercent. a)How high is return on equity? b)Thecentralbankrisesshortterminterestratestotenpercent.Thecompanyisfinanced exclusively by short-term loans. How high is return on equity now?
ApubliccompanyhasabalancesheettotalofonemillionEURandatotalreturnonassetsofeightpercent.Theshareofforeigncapitalis90percent,theinterestrateforloancapitalisfivepercent. a)How high is return on equity? b)Thecentralbankrisesshortterminterestratestotenpercent.Thecompanyisfinanced exclusively by short-term loans. How high is return on equity now?
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The Economics of Public Issues
Authors: Roger LeRoy Miller, Daniel K. Benjamin, Douglass C. North
19th edition
