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The Neal Company wants to estimate next year's refurn on equity (ROE) under different financlal leverbge ratios. Neal's total capital is sso mulion, it currently
The Neal Company wants to estimate next year's refurn on equity (ROE) under different financlal leverbge ratios. Neal's total capital is sso mulion, it currently uses orfly common equity, at has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 25%, Neal is a wnall firm with average sales of $25 milien or iees during the past 3 years, so it is exempt from the internst deduction limitation. The Cro has estimated next year's Estr for there poss bie states of the world: 45.2 maion with a 0.2 propability, 51.9 millin not round intermediate calculations. flound your answers to two docimal places. Debucapital ratie is 0. ROE: a. evi: DebUCapital fatio is 10%, intarest rate is 9%. Rof: o1 EVi Dobteapital ratio is So\%, interest rote is 11%. Deoy/canital ratio is coWi, intarest rate is 14%. HE
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