Company XYZ has equity of 50 mil. In the last year the total cost of the company was 112 mil. and total revenues were 120 mil. The tax rate was 40 %.

Required:

a) Determine the profit before tax and profit after tax for the last year.

b) Find the companys return on equity (ROE).

c) Find the maximum total cost of the company that assures that the ROE does not fall under 8 per

cent.

d) The company issued new shares in total amount of 20 mil. What is the ROE now?