What will be the company return on equity

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Reference no: EM131838349

Midwest Packaging's ROE last year was only 3%; but its management has developed a new operating plan that calls for a debt-to-capital ratio of 60%, which will result in annual interest charges of $300,000. The firm has no plans to use preferred stock and total assests equal total invested capital. Management projects an EBIT of $1,000,000 on sales of $10,000,000, and it expects to have total asset turnover ratio of 2.0. Under these conditions the tax rate will be 34%. If the changes are made, what will be the company's return on equity?

Reference no: EM131838349

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