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Consider the following case: Newtown Propane is considering a project that will require $700,000 in assets. The project will be financed with 100% equity. The
Consider the following case: Newtown Propane is considering a project that will require $700,000 in assets. The project will be financed with 100% equity. The company faces a tax rate of 30%. what will be the ROE (return on equity) for this project if it produces an EBIT (earnings before interest and taxes) of $160,000? O 13.6% 17.6% 16.0% 16.8% Determine what the project's ROE will be if its EBIT is -$60,000. When calculating the tax effects, assume that Newtown Propane as a whole will have a large, positive income this year -6.3% 0-60% O-4.8% 0-51% Newtown Propane is also considering financing the project with 50% equity and 50% debt. The interest rate on the company's debt will be 10%. what will be the project's ROE if it produces an EBIT of $160,000? 25.0% o 28.8% 20.0% O 17.5%
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