Question
You have been hired by a new firm that is just being started: The CFO wants to finance with 60% debt, but the president
You have been hired by a new firm that is just being started: The CFO wants to finance with 60% debt, but the president thinks t would be better to hold the percentage of debt in the capital structure (g) to owly 13% Both compares an amail. they are not subject to th erest deduction imitation Other things haid constant, and based on the data below uses more debt, by how much would the ROE change, ie, what is ROEHigher ROE Lower Do not roun your intermediate calculations (Hint: As a first step, use the information in the Operating Data to calculate EBIT) Operating Dat Other Data Capital ROIC EBIT-TYC Tax rate 04634% OC64% OD8% $4,000 10% 25% Higher 60% 13% 10%
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