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Sales COGS Expenses Tax rate Assets Debt Interest Expense Equity 1,160 834 33 38.0% 1,300 0 NA Please compute the following: Equity Profit Margin ROE

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Sales COGS Expenses Tax rate Assets Debt Interest Expense Equity 1,160 834 33 38.0% 1,300 0 NA Please compute the following: Equity Profit Margin ROE Now, consider a new scenario. Let the firm be partly funded by debt. Details follows: Debt 300 Coupon rate 11.0% Please compute the following for the new scenario: Equity Profit margin ROE Please compare the changes in Profit Margin and Return on Equity. Which of the following is true? Note: the "change (decrease or increase) should be viewed as an "absolute" change. A Profit Margin dropped at least 1% B Return on Equity rose at least 3% C All of the above D None of the above

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