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Rowe and Company has an equity multiplier equal to 2.0 , a total assets turnover of 0.25 , and a proft margin of 10%. Rowe

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Rowe and Company has an equity multiplier equal to 2.0 , a total assets turnover of 0.25 , and a proft margin of 10%. Rowe has no preferred stock. The president is unhappy with the current retum on equity, and he thinks it could be doubled. This could be accomplshed (1) by increasing the profit margin to 14% and (2) by increasing debt utilization. Total assets turnover will not change. The firm's total assets equal $10 million, its total current liabiities are $400,000, and the firm has no short-term debt or preferred stock. What is the firm's total debt to total capital fatio it the ROE is doublod under these assumptions? a. 0.557 b. 0.600 C. 0.635 d. 0.706 e. 0.750 Rowe and Company has an equity multiplier equal to 2.0 , a total assets turnover of 0.25 , and a proft margin of 10%. Rowe has no preferred stock. The president is unhappy with the current retum on equity, and he thinks it could be doubled. This could be accomplshed (1) by increasing the profit margin to 14% and (2) by increasing debt utilization. Total assets turnover will not change. The firm's total assets equal $10 million, its total current liabiities are $400,000, and the firm has no short-term debt or preferred stock. What is the firm's total debt to total capital fatio it the ROE is doublod under these assumptions? a. 0.557 b. 0.600 C. 0.635 d. 0.706 e. 0.750

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