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Last year and Corp. had $270.000 of gets which is equal to its to invested capital). 318.750 of net income, and a debt-to-total-capital ratio of
Last year and Corp. had $270.000 of gets which is equal to its to invested capital). 318.750 of net income, and a debt-to-total-capital ratio of 37%. Now suppose the new CFO convinces the president to increase the debt-total-capital ratio to 48% Sales, toast and total invested capital will not be affected, but interest expenses would inc. However, the CFO believes that bener cost controls would be sufficient to that the higher interest expense and thus kop net income unchanged. By how much would the change in the capital structure improve the ROE? Do Baround your intermediate calculation
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