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please I need immediate solutions now please now thank you Ghost, Inc., has no debt outstanding and a total market value of $230,400. Earnings before
please I need immediate solutions now please now thank you
Ghost, Inc., has no debt outstanding and a total market value of $230,400. Earnings before interest and taxes, EBIT, are projected to be $39,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 13 percent higher If there is a recession, then EBIT will be 24 percent lower. The company is consideringa $125,000 debt issue with an interest rate of 6 percent. The proceeds will be used to repurchase shares of stock. There are currently 7,200 shares outstanding. Ignore taxes for questions a and b. Assume the company has a market-to-book ratio of 1.0 and the stock price remains constant. a-1. Calculate return on equity (ROE) under each of the three economic scenarios before a-2. Calculate the percentage changes in ROE when the economy expands or enters a intermediate calculations and enter your answers as a percent rounded to 2 any debt is issued. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) recession. (A negative answer should be indicated by a minus sign. Do not round decimal places, e.g., 32.16.) b-1. Assume the firm goes through with the proposed recapitalization, Calculate the return on equity (ROE) under each of the three economic scenarios. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b-2. Assume the firm goes through with the proposed recapitalization. Calculate the percentage changes in ROE when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g. 32.16.)GMBA 561 Chapter 16 Homework 2 Expansion percentage change in ROE 2.5 points Assume the firm has a tax rate of 22 percent. c-1. Calculate return on equity (ROE) under each of the three economic scenarios before c-2. Calculate the percentage changes in ROE when the economy expands or enters a Skipped any debt is issued. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Hint recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c-3. Calculate the return on equity (ROE) under each of the three economic scen assuming the firm goes through with the recapitalization. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c-4. Given the recapitalization, calculate the percentage changes in ROE when the economy expands or enters a recession. (A negative answer by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g. 32.16.) should be indicated c-1. Recession ROE K Pre 2 of 8 E Next > 8 C-1. | Recession ROE eBook Normal ROE Expansion ROE C-2. Recession percentage change in ROE Expansion percentage change in ROE References c-3. Recession ROE Normal ROE Expansion ROE c4. Recession percentage change in ROE Expansion percentage change in ROE Prey 2 of 8 Next > al tab
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