Question
You have the following data. What is the ROE difference between Firm L and Firm U, in order words, ROE L - ROE U =
You have the following data. What is the ROE difference between Firm L and Firm U,
in order words, ROEL - ROEU = ?
Firm U
Capital : $30000
EBIT : $8506
Tax rate = 25%
Equity : $30000
Debt : $0
Firm L
Capital : $30000
EBIT : $8506
Tax rate = 25%
Equity : $17216
Debt : $3844
Rd (interest rate): 8%
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Entrepreneurial Finance
Authors: Gary E. Gibbons, Robert D. Hisrich, Carlos Marques DaSilva
1st Edition
1452274177, 978-1452274171
