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I have a company that has an average debt interest rate of 6%, the owners' required return on their invested capital is 15%. The debt
I have a company that has an average debt interest rate of 6%, the owners' required return on their invested capital is 15%. The debt / equity ratio is 2. a) Calculate how low the return on capital employed must be in order for the ownership requirement (Re) to be met. ) b) If the Equity ratio is instead 20%, how large must the return on capital employed be in order for the owners' return on equity (Re) to be met?
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