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please explain 14. Burak Packaging's ROE last year was only 3 percent, but its management has developed a new operating plan designed to improve things.
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14. Burak Packaging's ROE last year was only 3 percent, but its management has developed a new operating plan designed to improve things. The new plan calls for a total debt ratio (D/TA) of 60 percent, which will result in interest charges of $400,000 per year. Management also projects an EBIT of $1,000,000 on sales of $10,000,000, and it expects to have a total asset turnover ratio of 1.5. The firm's anticipated tax rate is 25 percent. If these changes are made, what return on equity (ROE) will the company earn? A. 12.0% B 13.59 C. 15.4% D. 16.99 E. 21.5% Step by Step Solution
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