Question
there are two companies each with a net income of 1.2 million and total asset value of $10 million. Company A has a capital structure
there are two companies each with a net income of 1.2 million and total asset value of $10 million. Company A has a capital structure that is 35% debt and the rest equity. Company B uses 60% debt. Which company has a higher ROE, and what is it?
A. Company B, 26.4%
B. Company B, 17.3%
C. Company A, 23.5%
D. Company A, 18.5%
E. Company B, 30.0%
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Financial Institutions Management A Risk Management Approach
Authors: Anthony Saunders, Marcia Cornett, Otgo Erhemjamts
10th Edition
1260013820, 978-1260013825
