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Top management of Cabo company is considering two alternative capital structures for 2 0 2 5 . The first ( the no debt structure
Top management of Cabo company is considering two alternative capital structures for The first the no debt" structure would be to have $ in assets and $ in stockholders' equity, with shares outstanding the entire year. This is the structure the company had on December Alternatively, the "with debt" structure on January the company could issue $ in debt at interest and immediately use the proceeds to repurchase shares of stock for $ The expected amount of net income ignoring taxes prior to any interest costs, is $ for
Assume the company pays dividends on common stock equal to its net income each year. Also, assume the accrued interest on the debt was paid at December and the company has no other debt outstanding at yearend. Also, assume the company has $ in assets at both the beginning and the end of
Compute the company's return on common stockholders' equity and return on assets under both structures. Round answers to decimal places, eg
tableNe Debt,With Debt,Return on common stockholders' equity,
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