Calculate basic earning power and return on equity

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Broward Manufacturing recently reported the following information:

Net income                                      $372,000

ROA                                                      8%

Interest expense                               $141,360

Accounts payable and accruals             $1,000,000

Problem 1: Broward's tax rate is 25%. Broward finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, and 60% of its total invested capital is common equity. Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC). Do not round intermediate calculations. Round your answers to two decimal places.

Reference no: EM132787276

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