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Suppose Khoshjamal Corporation is considering a project that will require $400,000 in assets. The project is expected to produce an EBIT (earnings before interest and
Suppose Khoshjamal Corporation is considering a project that will require $400,000 in assets. The project is expected to produce an EBIT (earnings before interest and taxes) of $45,000. The project will be financed with 100% equity. Common equity outstanding will be 20,000 shares. The company faces a tax rate of 30%. Using the preceding information, what will Khoshjamal Corporation's return on equity (ROE) be for this project? Khoshjamal Corporation's earnings per share (EPS) will be if it finances this project with 100% equity. Khoshjamal Corporation's CFO is also considering financing rate on the company's debt will be 13%. Because the comp ct with 50% debt and 50% equity. The interest lance only 50% of the project with equity, it will Khoshjamal Corporation's CFO is also considering financing this project with 50% debt and 50% equity. The interest rate on the company's debt will be 13%. Because the company will finance only 50% of the project with equity, it will have only 10,000 shares outstanding. What will the ROE be on this project if the company decides to finance the project with 50% debt and 50% equity
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