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Ohio Quarry Inc. has $13 million in assets. Its expected operating income (EBIT) is $5 million and its income tax rate is 40 percent. If Ohio Quarry finances 20 percent of its total assets with debt capital, the pretax cost of funds is 10 percent. If the company finances 40 percent of its total assets with debt capital, the pretax cost of funds is 15 percent. Round your answers to the questions below to two decimal places. Problem 1: Determine the rate of return on equity (ROE) under the three different capital structures (0, 20, and 40% debt ratios).
Problem 2: Determine the ROE under each of the three capital structures (0, 20, and 40% debt ratios) if expected EBIT decreases by 40 percent.
Problem 3: Determine the percentage change in ROE under each of the three capital structures (that is, debt ratios) as the result of a 40 percent decline in EBIT. Use the minus sign to enter a negative percentage change in ROE if necessary.
Which Net Present Value can be defined as? The discount rate that causes the current value of cash inflows to exceed the current value of cash outflows
Record all journal entries to revalue the machine on 30 June 2019. On 1 January 2016, Tonga Ltd purchased a machine for $500 000. It had a useful life of 6 year
question rapid industries has multiple divisions. iron products one division makes a component that another division
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What is the break-even point in unit sales for each product? If the company sells exactly the break-even quantity of each product, what will be the overall profit of the company?
Compute the dividend per share on each class of stock for each of the four years. Round all answers to two decimal places
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