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For the coming year, Crane Inc. is considering two financial plans. Management expects sales to be $ 3 0 1 , 7 7 0 ,
For the coming year, Crane Inc. is considering two financial plans. Management expects sales to be $ operating costs to be $ assets to be
$ and its tax rate to be Under Plan A it would use debt and common equity. The interest rate on the debt would be but the TIE
ratio would have to be kept at or more. Under Plan B the maximum debt that met the TIE constraint would be employed. Assuming that sales,
operating costs, assets, the interest rate, and the tax rate would all remain constant, by how much would the ROE change in response to the change in the
capital structure?
Select the correct answer.
a
b
c
d
e
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