How much would the change in the capital structure

Assignment Help Finance Basics

Reference no: EM133430376

Question: Last year Rosenberg Corp. had $120,000 of assets, $18,775 of net income, and a debt-to-total-assets ratio of 32%. Now suppose the new CFO convinces the president to increase the debt ratio to 48%. Sales and total assets will not be affected, but interest expenses would increase. However, the CFO believes that better cost controls would be sufficient to offset the higher interest expense and thus keep net income unchanged. By how much would the change in the capital structure improve the ROE?

Reference no: EM133430376

Questions Cloud

List character traits for each one and provide evidence : List three character traits for each one and provide evidence from the story (a quotation). You can use the list of character traits found in Class Handouts

What are instructional strategies you might use to get : What are instructional strategies you might use to get students engaged in flexible grouping? Slide 7: How might you use flexible groups to support your student

Identify 2 different unearned privileges that you have : Identify 2 different unearned privileges that you have (e.g., race, class, gender, sexual orientation, age, religion, ability, etc.). In what ways do you

What strategies can new manager implement to ensure : What strategies can a new manager implement to ensure that his new team is engaged with him and builds relationships to succeed in his new role?

How much would the change in the capital structure : how much would the change in the capital structure improve the ROE - However, the CFO believes that better cost controls would be sufficient to offset

What does yousafzai experience suggest about an individual : what does Yousafzai's experience suggest about an individual's power to secure freedom for herself and others? your response with evidence from the interview

Supply chain management practiced by gardenia bakeries : Explain the structure/form of the supply chain management practiced by Gardenia Bakeries

Analyze the directors style and the form of the documentary : Analyze the directors' style and the form of the documentary, "The Act of Killing." Then discuss the ethical quandaries in the filmmaking process.

What is the equivalent pretax yield on a taxable bond : A municipal bond has a coupon rate of 6.10 percent and a YTM of 5.71 percent. If an investor has a marginal tax rate of 30 percent, what is the equivalent

User Account

All Pages