Question
Company XYZ has a debt ratio of 60% which will result in interest expense of $300,000, the EBIT is $1,000,000 and sales level of $10,000,000.
Company XYZ has a debt ratio of 60% which will result in interest expense of $300,000, the EBIT is $1,000,000 and sales level of $10,000,000. It expects to have a total assets turnover of 2.0 times. Under these conditions the tax rate will be 43 percent. What return on equity will the company earn?
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Principles of Finance
Authors: Scott Besley, Eugene F. Brigham
6th edition
9781305178045, 1285429648, 1305178041, 978-1285429649
