Solution-Company return on equity, Madonna, Inc. ROE last

Company return on equity

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Madonna, Inc. ROE last year was only 5%; but its management has developed a new operating plan that calls for a debt-to-capital ratio of 40%, which will result in annual interest charges of $561,000. The firm has no plans to use preferred stock and total assets equal total invested capital. Management projects an EBIT of $1,258,000 on sales of $17,000,000, and it expects to have a total assets turnover ratio of 2.1. Under these conditions, the tax rate will be 35%. If the changes are made, what will be the company's return on equity?

Reference no: EM133071729

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Company return on equity

Reference no: EM133071729

Reference no: EM133071729

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