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Midwest Packaging's ROE last year was only 3%, but management has developed plans to improve it. The new plans call for a total debt ratio
Midwest Packaging's ROE last year was only 3%, but management has developed plans to improve it. The new plans call for a total debt ratio of 60%, which will result in interest charges of $300,000/ year. Management projects an EBIT of $1M on sales of $10M and expects a total asset turnover of 2.0. The tax rate is expected to be 34%. If the changes are made, what will be the firm's new ROE? (7 marks)
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