you just recieve back the taxes when you have a negative taxabale income

E G H A B D 1 Problem 5 (2 x 10 = 20 points) 2 3. Gamma Group has $260 million in assets and is financed with 40% debt and 60% equity. 4 The cost of debt is 6.5% (before taxes). 5 Corporate taxes are 21% 6 The marketing department has figured out two scenarios for next year. 7 1. EBIT will be $5 million (probability: 30%) 2. EBIT will be $55 million (probability: 70%) 10 Questions: 11 a) Calculate the R.O.E. (Return On Equity) in each of the 2 scenarios 12 b) Calculate the mean and standard deviation from the ROE (probabilities taken into account). 13 14 15