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Firms Pinhani and Kolpa are identical except their use of debt and the interest rates they pay. Pinhani has more debt and thus must pay
Firms Pinhani and Kolpa are identical except their use of debt and the interest rates they pay. Pinhani has more debt and thus must pay a higher interest rate. Based on the data given below, calculate the Return on Equity Ratio for both companies. Applicable to both firms: Capital 3,000,000 EBIT $630,000 Tax Rate 35% Firm Pinhani's Data. Weight of Debt 70% Interest Rate 12% Firm Kolpa's Data Weight of Debt Interest Rate 20% 10% ROE(pinhani)=15.44%, ROE(kolpa)=27.3% ROE(pinhani)=27.3%, ROE(kolpa)=15.44% ROE(pinhani)=22.8%, ROE(kolpa)= 12.62% ROE(pinhani)=12.62%, ROE(kolpa)= 22.8%
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