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Mammoth Pictures Inc. is also considering financing the project with 5 0 % equity and 5 0 % debt. The interest rate on the company's

Mammoth Pictures Inc. is also considering financing the project with 50% equity and 50% debt. The interest rate on the company's debt will be 10%. What will be the project's ROE if it produces an EBIT of $155,000?
33.15%
39.00%
31.20%
40.95%
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 Mammoth Pictures Inc. as a whole will have a large, positive income this year.
-22.50%
-24.75%
-28.12%
-23.62%
ABC Telecom Inc. 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 he believes this move will increase the firm's stock price. If ABC Telecom Inc. proceeds with the recapitalization, which of the following items are also likely to increase? Check all that apply.
Net income
Cost of debt (rd)
Basic earning power (BEP)
Cost of equity (rs)
Return on assets (ROA)
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