Analyze the effects of ?nancial leverage on the rate

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Question: Tech Electronics is a manufacturing company with total assets of $1.2 million. The company has the opportunity to do a leveraged recapitalization that would involve borrowing 25% to 55% of the ?rm's assets at a rate of 8.5% per year. Moreover, the ?rm's annual return on its total investment in assets varies from 5% to 11%. Analyze the effects of ?nancial leverage on the rate of return earned on Kimble's equity if the ?rm borrows 25% or 55% of its assets

Reference no: EM133610066

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