Problem ( 20-30 ) Gama Croce 200 mionis financed werdebt and 60 The cost of debtis before tres Corse 2 The marketing department has gured out o carios for next year + Twibe 5 milion Crobaby 30%) 2 T will be 55 milion probably 70%) 10 Question 11 Calculate the ROE (Retum On Equity) in each of the 2 scenarios 12 bi Calculate the mean and standard deviation from the ROE (probabies taken into account) 1 15 D 1 Problem 5 (2 x 10-20 points) 3 Gamma Group has $260 million in assets and is financed with 40% debt and 60% equity 4 The cost of debt is 65 (before taxes) 5 Corporate taxes are 21% 6 The marketing department has figured out two scenarios for next year 1. EBIT will be $5 million (probability: 30%) 8 2 EBIT will be $55 million (probability: 70%) 9 10 Questions 11 a) Calculate the R.O.E. (Return On Equity) in each of the 2 scenarios 12 b) Calculate the mean and standard deviation from the ROE (probabilities taken into account) 13