Question
You are given the following information for Western, Inc. Sales 240,000 Debt 120,000 Dividends 5,000 Equity 30,000 Interest rate 7% Net income 16,000 Tax rate
You are given the following information for Western, Inc.
| Sales | 240,000 |
| Debt | 120,000 |
| Dividends | 5,000 |
| Equity | 30,000 |
| Interest rate | 7% |
| Net income | 16,000 |
| Tax rate | 30% |
Assume the company has no short-term debt. Also assume that all asset turnover, profit margin, and dividend payout ratios remain constant. (Hint: First prepare income statement working backwards from the bottom to find EBIT.) What is the companys return on invested capital (ROIC)?
| A. | 21.04% | |
| B. | 19.43% | |
| C. | 18.11% | |
| D. | 17.01% | |
| E. | 16.08% | |
| F. | 15.28% | |
| G. | 14.59% | |
| H. | 13.98% |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Management For Decision Makers
Authors: Peter Atrill
8th Edition
129213433X, 978-1292134338
