What was return on equity

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Reference no: EM132051113

1. ABC Corporation has a target capital structure of 60 percent common stock, 5 percent preferred stock, and 35 percent debt. Its cost of common stock is 10 percent, the cost of preferred stock is 5 percent, and the pretax cost of debt is 7 percent. The relevant tax rate is 30 percent, what is the WACC?

a. 8.700%

b. 6.312%

c. 7.965%

d. 5.246%

2. In 2014 XYZ Co. had sales of $74 billion and a net income of $23 billion, and its year-end total assets were $200 billion. The firm's total debt to total assets ratio was 45.3%. What was XYZ Co.’s Return on Equity (ROE) in 2014?

a. 22.97%

b. 8.67%

c. 25.62%

d. 21.02%

Reference no: EM132051113

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