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The Presidio Pipe Co. has the following capital structure: Bonds (9.7%) $140 mil Common Stock ($4 par) $230 mil Retained Earnings $170 mil EBIT is
The Presidio Pipe Co. has the following capital structure:
Bonds (9.7%) $140 mil
Common Stock ($4 par) $230 mil
Retained Earnings $170 mil
EBIT is $85 million and the tax rate is 40 percent. What is the firm's ROE and EPS?
| a | ROE = 10.71% EPS = $.75 | |
| b | ROE = 7.94% EPS = $.75 | |
| c | ROE = 12.4% EPS = $.86 | |
| d | ROE = 11.7% EPS = 13.2% |
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