Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
Please answer those question THANKS Commonwealth Construction (CC) needs $2 million of assets to get started, and it expects to have a basic earning power
Please answer those question
THANKS
Commonwealth Construction (CC) needs $2 million of assets to get started, and it expects to have a basic earning power ratio of 15%. CC will own no securities, all of its income will be operating income. If it so chooses, CC can finance up to 45% of its assets with debt, which will have an 11% interest rate. If it chooses to use debt, the firm will finance using only debt and common equity, so no preferred stock will be used. Assuming a 25% tax rate on taxable income, what is the difference between CC's expected ROE if it finances these assets with 45% debt versus its expected ROE if it finances these assets entirely with common stock? Round your answer to two decimal places. percentage points Grade It Now Save & Continue MPI Incorporated has $6 billion in assets, and its tax rate is 25%. Its basic earning power (BEP) ratio is 11%, and its return on assets (ROA) is 6%. What is MPI's times-interest-earned (TIE) ratio? Do not round intermediate calculations. Round your answer to two decimal places. Grade It Now Save & ContinueStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started