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FOR PROBLEMS #5, and #6: Henson Cancer Research Center (HCRC) is an established research and treatment facility, located in the Blue Ridge Mountains. HCRC is
FOR PROBLEMS #5, and #6: Henson Cancer Research Center (HCRC) is an established research and treatment facility, located in the Blue Ridge Mountains. HCRC is considering an expansion opportunity, but must first fully analyze the organization's financial health before moving forward with the expansion. The organization operates 365 days per year, generates $69,000,000 in annual revenues and currently utilizes an all-equity approach to financing. Earnings before interest and taxes is $10,000,000 and the organization holds $14,000,000 in assets. As a newly hired financial analyst, it is now your responsibility to perform the necessary calculations and provide a final report to the executive team. 6. Prepare HCRC's financial statements, comparing its current all-equity financing approach to a possible 60% debt financing approach. Assume an interest rate of 9% and a tax rate of 34% for your calculations. Create: a) the balance sheet, b) the income statement and c) calculate ROE. d) Which financing option has the best ROE? (20 points)
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