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Jacob Cornwall has a business in which hes invested $320000 of his own money, which is the firms only capital. (There are no other equity
Jacob Cornwall has a business in which hes invested $320000 of his own money, which is the firms only capital. (There are no other equity investors and no debt.) In a recent year, the firm had net income of $22000 for a return on equity of 6.88% ($22000/$320000). What will the firms return on equity be next year if net income from business operations remains the same but it borrows $130000 returning the same amount to Jake from the equity account if (Round your answer to two decimal places.):
a. The after-tax interest rate is 6%.________________% | fill in the blank |
b. The after-tax interest rate is 10%._______________% | fill in the blank |
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