hello I need help with this whole problem plz and thank you will like if correct Companies that use debt in their capital structure are said to be using financial leverage Using leverage can increase shareholder returns, but leverage also increases the risk that shareholders bear Consider the following case Wizard Co is a small company and is considering a project that will require $550,000 in assets The project will be financed with 100 equity The company faces a tax rate of 25 What will be the ROE (return on equity) for this project if it produces an EBIT (earnings before interest and taxes) of $155,000 17 97 12 68 21 14 16 91 Determine what the project's ROE will be if its EBIT is $50,000 When calculating the tax effects, assume that Wizard Co as a whole will have a large, positive income this year 7 48 6 8 5 44 O 7 14 Wizard Co is also considering financing the project with 50 equity and 50 debt The interest rate on the company's debt will be 12 What will be the project's ROE if it produces an EBIT of $155 000 38 26 33 27 31 61 23 29 What will be the project's ROE if it produces an EBIT of $50,000 and it finances 50 of the project with equity and 50 with debt When calculating the tax effects, assume that Wizard Co as a whole will have a large, positive income this year 20 38 22 64 27 17 26 04 D M Warehousing currently is financed with 10 debt and 90 equity However, its CFO has proposed that the firm issue new long term debt and repurchase some of the firm's common stock its advisers believe that the long term debt would require a before tax yield of 10 , while the firm's basic earning power is 14 The firm's operating income and total assets will not be affected The CFO has told the rest of the management tear that he believes this move will increase the firm's stock price If D M Wacehousing proceeds with the recapitalization, which of the following items are also likely to increase Check all that apply Net income Return on assets (ROA) Cost of equitv (rs) Basic earning power (BEP) Cost of debt (rd)

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hello. I need help with this whole problem plz and thank you will like if correct Companies that use debt in their capital structure are

hello. I need help with this whole problem plz and thank you will like if correct

Companies that use debt in their capital structure are said to be using financial leverage. Using leverage can increase shareholder returns, but leverage also increases the risk that shareholders bear.

Consider the following case:

Wizard Co. is a small company and is considering a project that will require $550,000 in assets. The project will be financed with 100% equity. The company faces a tax rate of 25%. What will be the ROE (return on equity) for this project if it produces an EBIT (earnings before interest and taxes) of $155,000?

17.97%

12.68%

21.14%

16.91%

Determine what the project's ROE will be if its EBIT is -$50,000. When calculating the tax effects, assume that Wizard Co. as a whole will have a large, positive income this year.

-7.48%

- 6.8%

-5.44%

O -7.14%

Wizard Co. is also considering financing the project with 50% equity and 50% debt. The interest rate on the company's debt will be 12%. What will be the project's ROE if it produces an EBIT of $155.000?

38.26%
33.27%
31.61%
23.29%

What will be the project's ROE if it produces an EBIT of -$50,000 and it finances 50% of the project with equity and 50% with debt? When calculating the tax effects, assume that Wizard Co. as a whole will have a large, positive income this year.

-20.38%

-22.64%

-27.17%

-26.04%

D&M Warehousing currently is financed with 10% debt and 90% equity. However, its CFO has proposed that the firm issue new long-term debt and repurchase some of the firm's common stock. its advisers believe that the long-term debt would require a before-tax yield of 10%, while the firm's basic earning power is 14%. The firm's operating income and total assets will not be affected. The CFO has told the rest of the management tear that he believes this move will increase the firm's stock price. If D&M Wacehousing proceeds with the recapitalization, which of the following items are also likely to increase? Check all that apply.

Net income

Return on assets (ROA)

Cost of equitv (rs)

Basic earning power (BEP)

Cost of debt (rd)